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Top 5 Methods to Manage Your Home Equity
As your home appreciates in value, you gain equity. You can look at this equity, as a portion of the value of your home, which becomes an asset that is not burdened by debt. Therefore, this is a critical financial vehicle that cannot be ignored.
Let me say it another way. For most of us, your home Equity is likely to be, the primary, unencumbered assets of your own, personal estate.
Here are several things to consider, when managing this critical financial leverage:
2. Debt Consolidation
3. Home Improvements
4. Equity Lines of Credit
Personally, I hate debt. I absolutely, positively, detest debt. I do everything in my power to completely eliminate it from my life. Therefore, this first method is my own, personal favorite.
a) Leave it alone. Ignore it. Pretend it's not there. Forget about it. Live life as if it did not exist.
b) The equity in your home can become an absolutely essential cog in the wheel of your retirement. But in order for it to work its magic, you need to allow it to build and grow, and avoid all temptation to tap into it.
c) If you can do this, then at the end of the tunnel, there is a nice nest egg waiting for you.
2. Debt Consolidation:
Of course, the above principals of using equity for retirement may not be entirely wise, if you are burdened with additional debt.
a) If your debt is large and encumbering enough, then you may want to consider refinancing and incorporating that debt into a new, first deed of trust. Not only is this more organized and simplified, but you can stretch the loan out over 30 years, thus allowing more affordability.
b) If you wish to pay off the additional debt sooner, or if the debt is small enough, then you might want to consider a second mortgage on the home.
c) Either way, the interest paid on either the new first loan, or the second loan, will be a write off, and thus, you will gain an added benefit by restructuring.
d) In addition, the interest rate on a second (or first) is far lower, then what you'd expect to pay on an unsecured loan, such as your credit card.
3. Home Improvements:
There comes a time in everyone's life, when you just want to make some changes around the homestead. If you are in the market for a new pool, a decked out backyard landscaping job, a new roof, or new appliances, et al., then a second loan or refinance is generally the way to go.
a) Not only can you pull out a much larger amount of money from your home, then say your credit cards, but the terms are much more agreeable, stretched out over 7 to 10 years or more, at a much lower rate.
b) It's a write-off.
c) The money spent, goes towards improving the home, and thus, adds to the overall value of your estate.
4. Equity Lines of Credit:
It's always good to plan for emergencies.
a) An Equity Line of Credit can provide you with the security you need to ensure that you'll always have liquid assets around, should you need them.
b) This is much more effective than having a large amount of money sitting in a low to no interest bearing savings account in your local bank. Open an equity line of credit, and go invest that money so that it is working for you.
c) It's also harmless, free, and usually tax-deductible should the need arise to use it.
d) Just keep in mind the importance of discipline. Don't use it, unless it's absolutely necessary.
A word of caution: I'm not advocating that you jump in to uncharted waters, or freely spend the hard earned equity that you've so diligently been building.
a) But it is your equity. You can save it, consolidate with it, spend with it, and use it to invest in other properties, other businesses, other ventures.
b) So your equity is like your own personal bank. It requires no applications, no processing procedures, and no approvals by the board of directors. It requires none of that, because it is yours. You own it.
c) But just keep in mind, that you have equity because of diligence, intelligence, wisdom, and discipline. You've grown it, and now that you have it, another word of caution: Don't waste it frivolously.
Be good to your equity, and it will be good to you.
We've enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.
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Copyright 2005, by http://www.ExpertLoan.Net, This article is available in full format at: Your Home Equity, Tom Levine provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services.
Home Equity Loan ? When Does Refinancing Make Sense?
For the last two years, interest rates have been much lower than anytime during the last thirty years. This has resulted in an unprecedented boom in real estate sales, home refinancing and home equity lending, as borrowers try to take advantage of these rates for the long term. But refinancing or even borrowing against your home's equity may not make sense for everyone. When is it a good idea to refinance your home? When is it not advisable?
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Refinancing Your Mortgage Can Open Up A Lot Of Options For You And Your Family
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Refinance Your Mortgage to Rebuild Credit
Refinancing your mortgage is one way to rebuild your credit, particularly if you have recently declared bankruptcy. With a poor credit history, you can find refinancing through a sub prime lender. To rebuild your credit, make regular payments on your mortgage and other bills. Then after two years, refinance again for lower rates with your now good credit rating.
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What is a Commercial Mortgage?
A commercial mortgage is a loan that uses commercial property as collateral. A commercial mortgage is a business loan which is secured against a commercial property.
Internet & Mortgage Calculations
"You've been approved!" The words you have always wanted to hear when you filled out the home loan application. It swirls through your mind the opportunities and memories you will cherish in your new home. Before you even start shopping for a home it is best to understand in real terms what you can afford. Your income level may make it tight for you every month to make the mortgage payment if you purchase too much home.
How do I know what is the best Second Mortgage Home Loan for me?
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Flexible Mortgage Guide
Here is a useful flexible mortgage guide. Flexible mortgages are loans which allow you to increase or decrease the size of your repayments within certain limits. This type of mortgage is relatively new.
Mortgage Brokers or Banks: Which is Right For You?
When you're looking for a home loan, you might work with an officer at a bank or other lending institution, or you might choose to work with a mortgage broker. The end result is the same - a new house, but the two types of jobs differ.
How a Commercial Mortgage Can Help Your Business
A commercial mortgage or commercial remortgage is a business loan which is secured against a commercial property.
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Once you've purchased your home, you will begin to get correspondence from your lender about a "Mortgage Reduction Program," in which you can cut years off your mortgage, without adding money to your payment. This is another trick bankers have to get you to give them your payment sooner, so they can hold it in escrow and make more money off of you.
Home Buyers Face Decisions that Affect Their Long-Term Financial Picture
Taking the step for prospective home buyers.into home ownership is one of the most important financial decisions a person will make in their lifetime. There are many factors to consider when embarking on this venture. Literally hundreds of loan programs are available, and it is important to find the one that best fits your personal long-term goals.
Kippers or Red Herrings?
Recent news has made much of parents stretching their finances to cover costs for their twenty and thirty something children. Debts and high property prices have forced many offspring to return home, tail between legs, under the attractive new marketing term of "kippers": kids in parents' pockets eroding retirement savings.
Little Known Secret: Eliminate your Mortgage in 23 years or less!
Wanna know a little secret? There is an ingenious method you can use, to pay off your 30 year fixed rate loan, in 23 years or less. It's straightforward, simple, and easy to understand. In this article, we're going to explore this little known secret, and we'll provide several examples of how it works, a few methods on how to implement, along with some information on where to go and how to get started.
Ten Things a Mortgage Processor Must Know to be Effective
From time to time, we hear a story about a processor gone bad. A processor that seemed so knowledgeable early on but now isn't keeping pace and can't seem to get along with anyone. Many unhappy customers, unhappy loan officers, and denied files later, Mr. Broker is forced to seek out a resolution.
Mortgage Cycling May Be Your Best Bet For Equity Buildup and Investment Real Estate
Mortgage cycling is a system that relies on solid budgeting, equity lines of credit and use of an open credit card. Whether you use this on investment real estate or your own home, it can work for wealth building. If you are short on equity in your home and/or don't have an open credit card, a decent-sized savings account or money market will get your mortgage cycling started just as easily.
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