Finance Mortgage – Your Home Can Save You

Your home is the single biggest and most useful investment you can have in your life. And knowing how to use its value properly will help you in many ways. I am not talking about giving you shelter or having a place to rest. That’s given. What I mean is your home can be used during emergency financial situations. What are those, you ask? Before I enumerate them, let us first discuss how can a financial mortgage save you…

You own a home. Yes, not totally because you are still paying for the mortgage, right? Still, you own a good amount for equity which you can tap anytime. (The equity is the fair market value of your home after you subtract the unpaid balance of your mortgage and other outstanding debts.) For example, the total value of your house is $400,000. You still have $250,000 to pay for the mortgage, so your equity is $150,000. You can use this amount to use as capital for a business venture, pay off emergency medical bills, fund a major house repair or finance your child’s college education.

There are two ways to apply for a home mortgage: the home equity loan and the home equity line of credit (HELOC).

Home equity is a type of loan where you can use the equity as collateral for the loan. Once approved, you shall receive a lump sum amount equivalent to the equity of your home. This is ideal when you want to pay large amount of money. Some factors like poor credit score can reduce the amount of money you can borrow. Home equity loan can be referred to as second mortgage or fixed-rate loan since the amount you pay throughout the term does not change. The good thing about fixed-rate is that you can easily plan your payment every month.

The home equity line of credit (HELOC) is a type of loan which can be compared to a credit card. Once approved, the lending company will give you a card with a credit limit which will become the means of purchase. The HELOC is bounded by a changing interest rate.

Ways you can use your home equity:

Pay Off Emergency Medical Bills – Sometimes, insurance coverage is not enough and you need additional source of money to pay off emergency medical bills. You can apply for a home equity loan to get the needed amount.

Capital for a Business Venture – Not enough cash savings for the business you want to set up? Why not tap the equity of your home.

Fund a Major House Repair – This is probably the best way to use the equity of your home. A good yard landscaping, kitchen refacing, or living room expansion can increase the value of your home by 30%.

Debt consolidation – The practice of using the equity of the home to consolidate debt is becoming more and more popular. This is because the convenience it gives to the homeowner. Once you apply for a home equity loan and use the money for debt consolidation, you pay all your debts, you save your credit card and utility services, and you relieve the stress from collectors knocking at your doors or calling you at the phone. All you worry about is the mortgage. When used properly, home equity loan can save you from the interest you pay from all the credits you owe.

Finance Your Child’s College Education – Entering your child to a prominent college or university is costly. If you do not have enough income to make sure that his or her education can be supported, the easiest and the most ideal way to finance his or her college education is by applying for a mortgage loan.

Every loan is coupled with big responsibility especially when your home is on the line. Your house may save you in dire financial emergencies but you have to make sure that before you borrow money, you have a regular source of income where you can pull out extra cash to pay for the mortgage. Again, mortgage is good if used wisely. Consult a mortgage broken, do your homework, and negotiate your terms when you have decided that you need to use your equity.