Online Home Equity Loans: A Basic GlossaryWritten by John Ross
Home equity loans can be a great idea for individuals looking to get out of debt or make necessary repairs on their homes. During process, you will come across a variety of terms and acronyms. We have gathered together some of basic terms that you come across during your home equity loan. If you have any questions about any of these terms, make sure to consult with your mortgage lender.Adjustable Rate Mortgage (ARM): This type of mortgage has an interest rate that will change over time. Typically interest rate will be lower than fixed mortgage products. Amortization: Loan payments that will cover both principle and interest in one payment. Your lender will likely give you an amortization schedule outlining your payment schedule. Annual Percentage Rate (APR): This is cost of credit on a yearly basis. Appraised Value: An appraiser will determine value of your home based on experience, market data, and other information. Cap: This is limit on how much an interest rate can increase over life of your loan. Closing/Closing Costs: This is final step in real estate transaction. This would include delivery of deed, signing of notes, and final disbursement of funds. There will be various fees associated with a closing, such as attorney fees and taxes, that are called closing costs. Depreciation: An overall loss on a property due to age, physical deterioration, and economic factors. Discount Point: A buyer can pay lender a set fee for a lower interest rate. This is usually a percentage of loan itself.
| | Home Equity – Is it Time to Cash Out and Move?Written by Charles Essmeier
During last five years, home prices have increased nationwide. In some parts of country, notably California, home prices have doubled or even tripled. The median price of a home in Los Angeles area is now nearly $450,000 and in San Francisco area, price is approaching $600,000. As economy continues to improve, price of housing continues to rise in California and elsewhere. Many people who have owned their homes for more than three years are suddenly finding themselves with hundreds of thousands of dollars in equity. Of course, equity is only a theoretical gain, and if price of housing goes down, equity can go away. You only get to keep your equity as cash if you sell your home. Many homeowners are doing just that.
Home equity loans are increasingly popular these days, and many people with large amounts of equity in their homes are borrowing against it and using money for home improvements, dream vacations or other luxury items. Others are simply cashing out and moving elsewhere. While prices on both coasts are rising at a breathtaking rate, price increases in most of country are still more modest. A homeowner in California who bought a home five years ago for $200,000 may have a home worth $500,000 today. If that homeowner were to sell that home and move to Texas, or Iowa or even parts of Florida,
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