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Home Equity Loan California
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A home equity loan is similar to a second mortgage. With home equity loans the lender gives loan against the equity of your house. Your house already is under mortgage and taking another loan on the house is a second mortgage. The equity on your house is a good line of credit with the help of which the borrower can fulfill his needs. The home equity loans can be used for just anything like paying off bills, a home improvement, buying a car, funding your childs education etc.
There are a number of homeowners that go in for second mortgage. There are times that the interest rates would go down and would be lower than your previous mortgage rates. In such a case you can opt for a second mortgage and repay the previous mortgage. With this option you can save a lot of money, as you would be paying in a lower interest rate, which would mean lower monthly payments. Besides this you can also go in for home refinance loans these loans however take a longer time for processing. The home equity loans are processed faster and you can immediately get the benefit of applying for these loans.
There are a number of banks in California that offer home equity loans. Most of the people would prefer to get a home equity loan from a bank rather than a private lender because banks are considered to be more stable. But if you limit yourself to the banks then you can miss out on some of the better options. The banks take a long time maybe 2-3 weeks to process the application and at times the application is rejected making it a lengthy process. Besides this the banks also ask for a lot of documents that can take days and weeks to arrange for.
The banks also offer a higher interest rate. The banks offer reasonable interest rates for the California home equity loans but there is a lot of competition and this would make the reasonable rates seem to be very high. There are also cases where the banks would offer more amount than what the borrower can actually pay back. Before you apply for a home equity loan with any bank you should compare your offers and make sure that you are getting the best deal.
The banks usually have set criteria for giving out the home equity loans. In case your credit score does not fall within the specified limit you can be denied of the California home equity loan. In case you have a bad credit history then you should look for options other than the bank for getting your home equity loan. When you have bad credit you can easily improve your credit by taking the home equity loan. Remember that every payment that you make on time towards the loan your payments are reported to the credit bureau and this can help you improve your credit score.
While comparing home equity loans you should compare the Annual Percentage Rates (APR) of the loan. It is important that you compare these loans, as they would estimate the total cost of the loan that would be incurred in the course of repayment. The terms of the loan also affect the rate of the home equity loan. However the shorter the duration of the loan the lower is the interest rate on the loan. When you have chosen your lender the application process is very fast.
There are some documents that are required by the lender before the loan is sanctioned. These documents include a proof of your income; papers proving the ownership of the house; documents stating the previous mortgage amount that is remaining to be settled. Besides this you are also required to provide your social security number and your credit report.
Besides having a lot of advantages the home equity loans also have some drawbacks. The underwriting criteria for the loans is much more difficult than the other loans because a lot of documentation is required. When you take a home equity loan then it can be difficult for you to sell your house. Though the interest rates are low but the time duration is so long that the borrower ends up paying more. These loans are secured against the property so if you default at any point of the repayment then you would be losing the property. The lender has the full right to put your property on foreclosure if you default on the payment. Even if your property is put on foreclosure you get some time for paying the amount as per the laws. If you still cannot pay back the amount in this time then your house is put for a foreclosure sale so that the lender can regain his amount.
Before you sign up for a home equity loan make sure that you have gone through all the terms and conditions of the contract. Well before signing up for the loan you should analyze your financial situation and then apply for the loan. The lenders would agree to give the loan at a lower interest rate if you have a good credit rating and a good home equity. The best and the easiest way that you can look for a lender in California is to search on the Internet. With online lenders you can compare the loan cost and the terms offered by different lenders. Getting a good deal is as important as getting a good home equity loan lender.
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