This week’s we zone in on home equity loans. There is a tug of war going on right now between interest rates and inflating asset prices that’ll dictate where housing prices will go over the next several years. This adds a lot of uncertainty to people looking to enter the real estate market for the first time, but it will also greatly impact those already in it looking to take out home equity. A short-term home equity loan may be your best option. You may have missed the episode live beuse you were watching an amazing Euro Finals, but have a listen to it now to learn some helpful tips for evaluating your home equity loan options.
Three helpful considerations in order to get the best product FOR YOU are:
1. ? ? ?Time: Whatever amount of time you think you need the money for, add three months. Lenders will reduce rates if you are precise with the time you need the money for beuse they want to be able to lend your money right back out again after you paid it back. If you underestimate how long you need the money for, you’ll be forced to renew for another term and get hit with fees in the process.
2. ? ? ?Amount: Similar to the time aspect, understating the amount of money you need also leads to extra fees if you go back to them for more. They will always try to give you less than you need as a result. So know your number, and make sure you get it or as close to it as you n where you know you won’t have to go back.
3. ? ? ?Exit Strategy: This is by far the most important. Lenders always want to know how their borrowers plan to exit the deal. If you n communite a clear and reliable plan to the lender for how the funds will be used and then returned, you’ll find they n be much more flexible on the rate they offer you.
These are important aspects of all home equity loan that lenders take very seriously. However, there are also questions that you as the borrower should be asking your lender before coming to an agreement:
1. ? ? ?How long will it take to close the deal? The longer it takes, the your more debt continues to increase and your credit score decreases. Make sure your private lender n close the deal quickly.
2. ? ? ?Are there any hidden fees? Once you get closer to the closing date, lenders know that time is no longer on your side and if there are any fees you don’t know about yet, you may find you don’t have a choice anymore. Ensure you know all the fees that may be involved, from the lender, any appraisal, and legal costs, before proceeding with the deal.
3. ? ? ?Don’t be afraid to ask the lender if they have dealt with other borrowers in your situation, and if so, what rates did they pay. Lenders and brokers are governed by regulators and they aren’t allowed to unfairly price gauge their borrowers. Make sure a lender does not detect desperation in your voice and upcharge you beuse of it.
Information is your friend in this space. The more you know about what lenders are looking for in a good borrower and what you need from them, the more you will be able to save long-term.
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