Home Equity loans; don?t put your Home or Condo at risk!!
Copyright 2006 Debt Management Credit Counseling Corp.
Debt Consolidation may be a better alternative
Have you seen those bank and mortgage ads on TV and newspapers telling you to pay off those pesky high interest credit card bills by tapping into the equity of your home? They make it sound real simple, apply on-line, call-us toll free, answers within hours, etc. They almost sound too good to be true. We all know about the dangers of things that are too good to be true. So, what are the dangers of using your equity to pay off your credit card debt? A minor detail they forget to mention in those ads; while banks frequently advertise home equity loans as a way to consolidate other high-interest debt, these loans don't wipe the slate clean. You still owe the money, and now it's linked to your homeownership.
Before we start, let's understand some important financial terms: Unsecured debt is not guaranteed by the pledge of collateral.
Most credit cards are an example of unsecured debt, which is why their interest rates are higher than other forms of lending, such as mortgages, which employ property as collateral.
Secured debt is secured by a lien on debtor's property which may be taken by the creditor in case of nonpayment by the debtor. A common example is a mortgage loan.
Equity is how much of the house you actually own. In other words, it is the price of your house on today's market minus the amount of any loans secured on the property. For example, if your house is worth $170,000 and your mortgage balance is $115,000, then your equity is the difference -- $55,000. This value can go up or down depending on economic conditions.
You can't sell that portion of the house that you own outright.
It's a package deal with the part that you're still paying on. However, you can get a hold of some of that money through a home equity loan (also known as a second mortgage).
Lately, many of us have experienced an increase in the equity of our homes or condos because of an unprecedented increase in our home values.
This is mostly fueled by the abnormally low interest rates.
These low interest rates created a home buying frenzy since the monthly cost of ownership was so cheap. For the past year though, interest rates have been steadily climbing and the monthly cost of home ownership has been steadily increasing making it more difficult to purchase a home.
This has resulted in a glut of homes on the market for sale. Remember the old supply and demand theory? More supply than demand for homes means the price of homes will fall and so will the amount of equity in the home.
Using our initial example, if you went to the bank and took a home equity loan for the $55,000 to pay off your credit cards, you have now secured all of this (unsecured) debt to your home. Taking this one step further, as interest rates go up, your home could go down. So, in theory you could owe more than the actual value of your home. This means if you wanted to sell your home and it was now worth $150,000 you would have to come up with an extra $20,000 just to be able to satisfy your financial obligation.
In 1988, homes throughout the country were at their highest value. Then in 1989, due to economic conditions, many companies had laid off employees and the housing bubble burst causing homes in some parts of the country a loss of up to 50 percent of their value overnight! There is no reason why this could not happen again. This is not a healthy scenario. The good news about equity loans is that they have lower interest rates than credit cards because they are secured against your house. The bad news is these loans are secured against your house.
If you miss a payment then you risk losing your home. Miss a credit card payment by itself and initially you will only have to listen to debt collectors, but you will still have your home.
The disadvantages of using a home equity loan to pay off your credit cards:
? By pulling money (equity) out of your home to feed your spending
habits, you may end up homeless.
? If you use your home to pay off credit card debt you lose your safety net.
? Taking out more debt to pay off current debt is a loser's game.
Please note: If you borrow more than 100 percent of the value of your home, or if the home equity loan is more than $100,000.00, some of the interest will not be deductible.
According to Bankrate.com, the worst possible long-term cost of a home equity loan is foreclosure. If you cannot afford two mortgages on your house, especially if other debts pile up again, you can lose your home to the bank. Defaulting on only one of the mortgages can lead to this expensive conclusion.
Contact a reputable Debt Consolidation Company There is little or no cost for the services. Most of the agencies are called Debt Management Credit Counseling Service and they:
? Work with lenders to negotiate a repayment schedule you can afford -- including making efforts to get finance charges reduced or waived.
? Develop a payment plan you can afford.
?Help you re-establish credit when your current debts are paid off.
If you participate in a Debt Management Program (DMP) program, it will show up on your credit report.
However, your credit is already blemished, your financial life is a mess, and you need to take drastic measures to get back on track. Since the bankruptcy laws have recently changed, the bankruptcy option may no longer be an option.
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Payday Car Title Loan
Payday Car title loans are the simple loan availing system in which it is used without the credit check and it adjusts the borrower's cash flow gap between paydays. Car loan providers offer you the loans in cash that is against a prearranged credit line such as your credit card.
The loan is secured by the borrower's post dated check which is usually given in the form of cash. Check of the borrower includes original loan principal and the accrued interest. Maturity period of the loan generally coincides with the borrower's succeeding payday.
The lender processes the check manually or through any electronic withdrawal from the borrower's checking account. This important activity is performed by the lender during the maturity date. Payday car title loans offer you with a greater chance of availing loans, since the loan companies do not make your credit check.
Payday car title loans are referred to the loans that are taken out of line of credit that imposes...
Payday loans > Payday Car Title Loan
Debt Consolidation with Free Government Grants? One Scam to Avoid
Have you ever seen a commercial or an ad promising "free government grant money?" According to these ads, the government and other organizations give away nearly one half a trillion dollars each year, and all you need to do is apply! The ads go on to state that the money can be used for anything, including debt consolidation , student loans, a yacht or just about any frivolous thing you can imagine. All you need to do is call their toll free number, buy their book or enroll in their program and the details are soon on their way to you.A half a trillion dollars is certainly enticing, but are organizations really just giving money away for the asking? Not exactly. Grants are certainly available from the Federal Government and elsewhere, but it's not as though the money is just handed out for the asking. Grants are usually given by organizations interested in achieving specific goals. If you're interested in bringing water to the desert,...
Debt Consolidation with Free Government Grants? One Scam to Avoid
Payday loans > Debt Consolidation with Free Government Grants? One Scam to Avoid
Home loans: what you should know !
Finding home loans can be a daunting task, whether you're a first time home buyer or an existing homeowner. The good news is that there are more options than ever to help you find the loan that's right for you. Check Your Credit ReportAn important first step is to check your credit report, preferably several months before you intend to apply for a loan. You are entitled to one free copy of your report every 12 months so it's easy to check it out. When you receive your report there are a few things that should garner your attention.
First, check to see that the information it contains is accurate. Does it incorrectly show late or missing payments? Does it show credit cards or other credit accounts that are incorrect? If you see anything that is not right then consult with the credit reporting agency regarding their procedures for making corrections. If My Credit Is Bad Can I Qualify For A Mortgage?Usually the answer is yes, but the loan process will likely be more involved and...
Home loans: what you should know !
Payday loans > Home loans: what you should know !
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.Bank Loan Officers: The loan officers at a bank, credit union or other lending institution are employees who work to sell and process mortgage and other loans originated by their employer. They often have a wide variety of loan types to draw from, but all originate from that specific lender.The loan officer takes your mortgage application and works to find a loan product that suits your needs. If your personal credit is approved, the officer moves forward to process the home purchase transaction.Mortgage Brokers: Mortgage brokers are professionals who are paid a fee to bring together lenders and borrowers. They usually work with dozens or even hundreds of lenders, not as employees, but as freelance mortgage agents.Think of mortgage brokers as scouts. <...
Mortgage Brokers or Banks: Which is Right For You?
Payday loans > Mortgage Brokers or Banks: Which is Right For You?
Auto Loan Calculator - The Fast and Easy Way to Calculate Your Finances when Purchasing a Car
Copyright 2006 Dean Shainin
Getting a car can be very exciting and yet be oh so nerve wracking. It's not just a matter of finding the car you want and paying for it. For some people who can actually afford to hand out the cash they can enjoy this pleasure, but for most people who are out in the market for a car, they don't have this luxury.
For many people looking for a new car or for a vehicle to replace their old ones, getting a car loan is an option they need to take. Buying a car on credit requires a lot of attention to details; there are interest rates, the monthly payments and tons of paperwork.
It is not advisable to just sign off on the loan without seeing if you can actually afford the monthly payments.
When calculating your monthly payments on your car loan you need to take many aspects into consideration. The amount of the car loan, interest rates, trade in value of your old car, outstanding loan of your old car (if any)...
Payday loans > Auto Loan Calculator - The Fast and Easy Way to Calculate Your Finances when Purchasing a Car