6 Things to Consider Before Refinancing

Perhaps you're a homeowner in need of some quick cash.

Maybe you want to consolidate your debts so you have better control of your money.

Perhaps a lender is urging you to refinance because interest rates are low, and he has a too-good-to-be-true deal that will shorten your current loan's term.

Here are 6 essential questions to ask yourself before making the decision to refinance.

1. What's My Motive-and What Will It Cost Me?

Before you even consider a refinance, ask yourself this fundamental question: "Why do I need it?"

"Many times, people take out a new, larger loan to pay off credit cards, automobiles or even to purchase another home," says Norm Bour, host of the nationally syndicated U.S. radio program The Real Estate & Finance Show, and an experienced mortgage lender. "Sometimes they need the money to do home improvements or renovations."

If, however, you want to lower your current loan payments or switch to a different type of loan, you must calculate the benefits before going the re-fi route.

"If someone is going from a fixed loan to another fixed loan, my general benchmark is to see a 1% reduction of interest rates to justify it," says Bour, who also teaches money-management classes in Southern California. "Sometimes the borrower goes from a fixed-rate loan to an adjustable to lower his payments. Sometimes he does just the opposite-maybe to get away from interest-rate volatility. These are very personal decisions, specific to each individual client."

2. How Long Will I Be in the Property?

You may already know-or suspect-that you will not live in your current home beyond a certain timeframe (perhaps 5 years). If this is the case, why would you even consider a 30-year loan?

"Sometimes, an adjustable-rate loan or a 'hybrid'-say, a 5-year fixed, then converting to an adjustable-makes the most sense," Bour says.
 

3. What Am I Worth?

Do your homework before trying to qualify for a new loan. You should know:

? The approximate market value of your property, as "loan to value (LTV) is one of the primary factors that control interest rate," Bour says.

? Your credit score, which will affect your overall ability to secure a loan, as well as the interest rates offered and the options available to you.

4. Do I Have a Competent Loan Officer?

In certain cases, refinancing may not yield "a monetary savings, per se," Bour says. This means there must be "compelling reasons" to secure a new loan, he emphasizes.

"A good loan officer will ask a series of questions to help the borrower identify his best option," Bour says. The officer should:

? Assess your current monthly cash flow and potential future risks.

? Calculate your monthly savings if you were to refinance.

? Determine how long it will take you to break even.

? Fully explain the different types of loans and interest structures.

? Disclose all closing costs and "hidden" fees (origination fees, escrow, title, underwriting, interest, taxes, insurance, prepayment penalties, etc.).

? Treat you with respect and as an individual-not come up with a one-size-fits-all, cookie-cutter approach to your financial future.

5. Do I Need a Second Opinion?

Because lenders have an interest (pun intended) in having you sign on the dotted line, it's often worthwhile to seek advice from a certified financial planner or other expert who has no investment or agenda when it comes to your refinancing decisions-especially if you're a first-timer who lacks fluency in real estate issues.

Accept your limitations, and have enough smarts to ask for help. A lot of money is riding on this decision, so never let pride get in the way of making the right choice.

6. Will This Hurt My Credit Rating?

"While refinancing, in and of itself, will do very little damage to credit scores, what will cause harm is excessive shopping amongst too many lenders," Bour says. "Each time a credit report is pulled by a 'potential grantor of credit,' it shows up as an 'inquiry'-and each inquiry drops the credit score by a little bit.

"In the United States, the laws have changed over the past few years, and inquiries do not have the same negative impact as they used to. Most credit bureaus will now look at a 'cluster' of inquiries over a short period of time as being one inquiry."

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Mortgage Relief specializes in assisting Australian families with mortgages by making their monthly repayments more manageable and decreasing their overall debt and total interest paid over the life of their mortgage. Mortgage Relief is a mortgage refinance provider that it part of Australia's largest Debt Relief? organization. Visit Mortgage Relief on the web at http://www.mortgagerelief.com.au or contact them directly on 1300 789 014.

Reverse Mortgages Learn The Facts First!

Reverse Mortgages, Most Common Features:

Many offer special appeal to older adults because the loan advances, which are not taxable, generally do not affect Social Security or Medicare benefits.

Depending on the plan, reverse mortgages generally allow homeowners to retain title to their homes until they permanently move, sell their home, die, or reach the end of a pre-selected loan term.

Generally, a move is considered permanent when the homeowner has not lived in the home for 12 consecutive months. So, for example, a person could live in a nursing home or other medical facility for up to 12 months before the reverse mortgage would be due.

However, be aware that:

Reverse mortgages tend to be more costly than traditional loans because they are rising-debt loans.

The interest is added to the principal loan balance each month. So, the total amount of interest owed increases significantly with time as the interest compounds.
 

Reverse mortgages use up all or some of the equity in a home. That leaves fewer assets for the homeowner and his or her heirs.

Lenders generally charge origination fees and closing costs; some charge servicing fees. How much is up to the lender.

Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.

Because homeowners retain title to their home, they remain responsible for taxes, insurance, fuel, maintenance, and other housing expenses.

Getting a Good Deal.

If you decide to consider a reverse mortgage, shop around and compare terms.

Look at the:

Annual percentage rate (APR), which is the yearly cost of credit. type of interest rate. Some plans provide for fixed rate interest; others involve adjustable rates that change over the loan term based on market conditions, number of points (fees paid to the lender for the loan) and other closing costs.

Some lenders may charge steep costs, which your lender may offer to finance. However, if you agree to this, you'll take out fewer proceeds from the loan or you'll borrow an extra amount, which will be added to your loan balance and you'll owe more interest at the end of the loan. Total Amount Loan Cost (TALC) rates.

The TALC rate is the projected annual average cost of a reverse mortgage, including all itemized costs.

It shows what the single all-inclusive interest rate would be if the lender could charge only interest and no fees or other costs. payment terms, including acceleration clauses.

They state when the lender can declare the entire loan due immediately. Under the federal Truth in Lending Act, lenders must disclose these terms and other information before you sign the loan.

On plans with adjustable rates, they must provide specific information about the variable rate feature.

On plans with credit lines, they must inform the applicant about appraisal or credit report charges, attorney's fees, or other costs associated with opening and using the account.

Be sure you understand these terms and costs.


For More Infomation On Reverse Mortgages Visit: http://www.debt-elimination-program-reviews.comThey review and then list some of the best debt elimination, programs, software and books available online in 2005, Including Free Articles, Special Reports and More!

Is an ARM Right For You?

Let's start by taking a look at 7 key elements of an adjustable rate mortgage:

1) ARM defined: While a fixed rate loan is constant and never changes throughout the life of the loan, an adjustable rate mortgage changes periodically. The interest rate of an ARM goes up and down based on whatever external index it is tied to. Add the lender's "margin" to that, and you've got the rate. Add costs to that, and you've got the APR.

Other considerations include the fixed period, the adjustment date, and the adjustment interval. There are built in risk management devices such as caps, conversion clauses, rate ceilings, rate floors, periodic payment caps, and periodic rate caps.

So, while fixed rate loans stay constant and are fairly straightforward, future payments on ARMS is an unknown, and they go up and down depending on a variety of variables.

2) Index: An adjustable rate mortgage is tied to an external index. If you look in the financial section of the paper today, you might see a chart posted for the 1 year constant maturity treasury index, also called the CMT, otherwise known as the 1-year "T-bills". You might see a graph, showing the T-Bills rising and falling in value over time.

About 50% of all ARM loans are tied to the 1 year T-Bills. If this is the index used on your loan, then your house payment will rise and fall alongside the T-Bill index (basically).

This is just one example of an index used for ARMs. There are indeed several, and some are more volatile than others. The point is that if that index goes up, the ARM can go up. If that index goes down, the ARM can go down.
 

3) Margin: Lenders' add a specific percentage to the index. This is called "margin". Put another way, the adjustable rate equals the interest rate tied to the index plus the lenders' margin. For example, if the T-bills are going for 1.5%, and the margin is 2.5%, then the ARM interest rate is basically 4%.

What's important to know is that different lenders charge different margin, and margin is different from one index to the next. So, just because the margin is cheaper on an ARM tied to T-bills, doesn't necessarily mean it's the best deal. What if the interest rate on a different index, say the LIBOR, is lower? Maybe the margin is higher? Keep your eyes open, and compare the combination of both margin and index, when looking to compare ARMs.

4) Fixed Period: The terms of the loan typically begins with a fixed period of anywhere from 1 month to 5 years or more, where the rate is not adjusted and stays constant (like a fixed rate loan). A 1 month ARM, for example, has a starting fixed period of 1 month, whereas a 1 year ARM has a starting fixed period of 1 year.

5) Adjustment Interval: After the fixed period has elapsed, then there will be an adjustment date in which the rate is modified to conform to the index within the terms of the loan. This interval is typically 1 year, 3 years, and 5 years, but a wide variety of intervals exists.

In other words, you start with a fixed period and the rate is fixed. Then you get to the adjustment date, and the rate goes up or down depending on the index and the terms of the loan. Then you go into the adjustment period, let's say the interval is 1 year, so for 1 year the rate stays the same. Then you get to the next adjustment date, and the whole process repeats itself.

6) Caps: There are built in devices to the ARM that helps manage the risk. For example, most loans incorporate an interest rate ceiling into their terms. The interest rate charged can never exceed the agreed upon ceiling. There is also usually a corresponding interest rate floor (the rate can never drop below this). There is usually a periodic rate cap, that limits the amount the rate can go up or down (during the adjustment period), irrespective of the index. There may be more in the terms of your loan worth exploring, but the important point here is that Caps help control risk. They make the ARM manageable.

7) Conversion Clause: What if 5 years go by, and the rates are still low, and now you're fairly certain you'll be living in your home for the next 10 years. In this instance, it might be wise to switch over from an ARM to a fixed rate. Many loans contain a conversion clause allowing you to convert the loan to a fixed rate mortgage. There is sometimes a fee associated with this provision. Also, the terms of the conversion clause may require a period of time to elapse before it becomes available.

So, is an ARM is right for you?

Of course, that's a question that only you can decide. However, here a few possibilities:

1. Buying Power: - Adjustable Rate Mortgages, in the right market, can allow buyers to purchase higher valued homes with a lower, initial, monthly payment.

2. Short Term Home Ownership: - The average home owner lives in one residence 7 to 8 years (not 30 years). Do you know how long you'll be there? If you have confidence that you're only there for the short term, then an ARM could save you money.

3. Risk versus Reward: - What is your level of comfort with risk and how prepared are you to adjust your finances accordingly? If rates stay steady or decline over the long term, an ARM could offer you the greatest possible savings.

Needless to say, a word of caution is appropriate here. Let's not forget the tried and true warhorse of the fixed rate loan. Fixed rate offers the least amount of risk to the borrower over the long term. There are many unknowns, many variables, and many terms and conditions that need to be considered when looking into an ARM.

The best place to start is always to evaluate fixed rate loans, as a benchmark, and then branch out your options from there. Know the current rates and get a feel for the "trend". Compare several loan offers before signing on the bottom line, and explore all the variables that go into these loans, including the 7 mentioned in this article. Talk to 3 or 4 lenders during this process, to see who you like doing business with. Above all, don't just fixate on the monthly payment. Shop rate, and review the terms of the loan offers.

We provide a free rate-watch at our website, along with a directory of lenders and resources, or you can go to any search engine on the internet and find other useful sites and tools out there.

We've enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.

Sincerely, Tom Levine

Copyright 2004, by LoanResources.Net

Publisher's Directions: This article may be freely distributed so long as the copyright, author's information, disclaimer, and an active link (where possible) are included.

About The Author

Tom Levine provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services. You can check out Tom's website here: http://loanresources.net, or you can email Tom at info@loanresources.net

How To Save Money On Your Mortgage

Obtaining a home loan is arguably the most expensive transaction you'll experience in your lifetime. Therefore, getting the best home at the greatest value is an endeavor worth pursuing. Whether you're trying to squeeze in to a higher priced home or just trying to shave a couple bucks off of the closing costs, this article will help you explore your options.

Here's a list of our top 7 things you can do to cut corners and save money on your mortgage


Shop Rate!

Shop Fees!

ARMs

Balloons

Interest Only

Incentives

PMI


1. Shop Rate!

Sometimes the obvious just needs to be stated out loud: Lenders do not charge the same rate. Some charge more, and some charge less.

Obtain several loan offers for consideration, and compare the rate.

If a lender offers you an unusually low rate, check for fees, points, and additional charges or changes in terms.

Don't fall into the trap of just going with the largest bank on the block. Do your homework and check your lender's background and reputation, but open your doors to all the choices that are available to you.

Obtain 3 or 4 loan offers, and check to see how the rates being offered compare to the current interest rates. Our website offers a directory of resources and a rate watch, and there are many other websites available to you through your favorite search engine that offers similar, free information.

2. Shop Fees!

Lenders charge different types of fees in varying amounts. You may see them stated as "points", "origination fees" or "costs". Whatever name is used, they represent the lenders' profit. Some lenders are willing to earn less, and some lenders' charge more in fees.

Obtain 3 or 4 loan offers and compare the quoted closing costs.

If you see unusually low interest rates, check to see if there may be unusually high origination fees or points being charged.

If you don't see any fees or points being charged, then check the rate and terms of the loan to see that it meets with your satisfaction.

Always compare fees and rates in conjunction with one another, and never settle for just one loan quote when shopping for a mortgage. Your home loan is just too important not to do your own homework.

3. ARMS:

An adjustable Rate Mortgage, in the right economical climate, can be an excellent way to lower payments.

With an ARM, the lender agrees to charge you a lower interest rate. This can save you hundreds of dollars off your monthly payment.

Often times an ARM carries a fixed period where the rate cannot change, such as one year for example.

If interest rates stay low, then an ARM can offer you an attractive way to obtain affordable real-estate and save money.

A word of caution: There are many variables to consider with an ARM, and it is important that you understand them before signing on the dotted line. Our website has an excellent article available to you; entitled "Is an ARM Right For you?" should you wish to explore this option in further detail.

. Balloons:

Another way to lower your monthly house payment is by structuring your loan using a Balloon, or by "floating a balloon".

The loan is amortized over a given period, say 30 years, but there is a final lump sum due at the end of a fixed period, and this is called the "balloon payment".

This fixed period is typically between 5 to 10 years.

This type of loan lowers your monthly payment, but be prepared to make new decisions when the fixed period is up, because your loan ends at that point.

Consider floating a balloon with caution, of course. Use this to compare against ARM loan products, to determine which one may be right for you.

5. Interest Only:

With an Interest Only Mortgage, you are only obligated to pay interest.

This first phase of the loan, interest only obligations, is typically 5 to 10 years.

After that, the loan is fully amortized for principal and interest.

So, for a 30 year fixed, that would mean that interest only payments are available the first 10 years, and then principle plus interest payments must be paid for the remaining 20 years.

Typically, this type of loan is very attractive for folks in commission-based employment, or where revenue is cyclical. In other words, you can up your payment to pay off principal, when it's most convenient for you.

Once again, this is an excellent loan product to lower monthly payments, and it can be compared to ARMS and floating Balloons.

6. Incentives:

Are you in the market for a brand new home? If so, check to see whether or not your builder offers incentives, such as the following.

The builder may pay additional points to help you lower your rate.

The builder may offer cash-back credits.

The builder may offer savings if you go through their own or recommended lender.

Builders are motivated to get their homes sold, so of course they can go build more. This allows you an opportunity to save money either in the purchasing of the home, or the back-end closing costs.

7. Closing Costs:

Take a look at all your closings costs, to see if there are additional savings that can be made:

PMI: Property Mortgage Insurance is typically required when you have less then 20% to put down. However, laws change all the time and homes can rise in value quickly. Check to see whether or not you have the right to have the PMI removed now or down the road.

Discuss all the closing costs. Find out whether some of them may be negotiable.

Review the charges for a variety of other significant closing costs, such as Title Fees, Credit Reports, etc., and compare with your other loan offers.



We've enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.

Publisher's Directions:

This article may be freely distributed so long as the copyright, author's information, disclaimer, and an active link (where possible) are included.

Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.
 

About The Author

Copyright 2004, by LoanResources.Net

Tom Levine provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services. You can check

 

The Top 5 Things You Must Know Before Applying for a Mortgage

You've been thinking about buying your own home for quite a long time, and now you're ready to take the plunge. You've been saving money for a down payment, and you know the next step is preparing to apply for a mortgage.

But where do you start?

Here are the top 5 things you need to know before approaching a mortgage lender.

1. Understand Your Options

All mortgages are not created equal. There are several different types, which vary based on interest rates and payment terms.

For example:

? With a fixed-rate mortgage, your monthly payments remain the same during the entire length of the mortgage. There will be no variations in monthly payments, regardless of changes in interest rates and inflation.

? With an adjustable-rate mortgage, you will often receive a lower initial interest rate, but your monthly payment amount can rise and fall as interest rates fluctuate (within certain caps or limits).

? With a balloon or reset mortgage, you once again may be offered a low interest rate, but it will hold for a limited time. After that, the balance of the mortgage will be due, or you will need to refinance.

2. Become a Rate Watcher

The state of the economy influences interest rates, which ebb and flow on a regular basis.

Your daily newspaper tracks these rates, so stay current by watching whether rates are rising, falling or remaining stable.

It behooves you to become as educated as possible about how these rates will affect your mortgage-and to see if you want to postpone applying for one until rates drop.
 

3. Get Pre-Approved

Consider getting pre-approved for a mortgage, says Frank Nothaft, PhD, vice president and chief economist for Freddie Mac, the stockholder-owned corporation established by the United States Congress in 1970 to create a continuous flow of funds to mortgage lenders in support of homeownership and rental housing.

"A benefit of being pre-approved for a mortgage loan is that it gives the prospective homebuyer additional bargaining leverage when competing with other prospective buyers for a home," he says. "A home seller may be more likely to accept an offer from a pre-approved borrower-because the seller knows the buyer can get a loan-than from another bidder, who may be exactly the same in financial qualifications and offer, except that he lacks the pre-approval."

4. Consider Making a Higher Down Payment

Making a higher down payment on a home will reduce your mortgage, but there are definite pros and cons, according to Dr. Nothaft.

"The pro of putting down more money is that you can often obtain lower-cost financing," he says. "High down-payment loans-that is, low loan-to-value ratio-represent less default risk to a lender, and are safer. That may translate into a lower interest rate or obviate the need for mortgage loan insurance.

"The con," he continues, "is that it may result in the borrower having to delay a home purchase, because the borrower does not have enough liquid assets to make a larger down payment. Low down-payment loans are especially important for first-time home buyers, who typically do not have the financial wherewithal to make a large down payment."

5. Select Your Lender Carefully

As in any industry, there are "bad apples" who ruin the reputations of respectable professionals. In the mortgage business, these folks are known as "predatory lenders"-individuals who take advantage of vulnerable consumers. Those most prone to becoming victims include the ill-informed, the elderly, women, minorities, low-income buyers and consumers with bad credit.

To avoid becoming "prey," select a lender with solid credentials. You can secure a referral from your bank or credit union, real estate agent, government housing agency, or friends and relatives who have successfully purchased homes.

Never trust a mortgage offer that arrives via email, as it likely originated from a spammer.

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Mortgage Relief specializes in assisting Australian families with mortgages by making their monthly repayments more manageable and decreasing their overall debt and total interest paid over the life of their mortgage. Mortgage Relief is a mortgage refinance provider that it part of Australia's largest Debt Relief? organization. Visit Mortgage Relief on the web at http://www.mortgagerelief.com.au or contact them directly on 1300 789 014.
 

Top 10 Things to Consider on Home Loans

Here are our Top 10 most important things to consider when shopping for a Home Loan, Equity Line of Credit, or Refinance, courtesy of Loans-Directory.Org:


Down-Payment

Fixed Versus Adjustable Rate

APR

Loan Types

Loan Amount Qualification, Income

Loan Amount Qualification, Expenses

Employment and Credit History

Points

Sub-Prime Loans

Short-Forms


1. Down-Payment - As a general rule of thumb, lenders will be seeking contribution from you of around 3% to 6% of the total loan value. This can be negotiable, and there are many loan packages available.

2. Fixed versus Adjustable - The two most common loan products available for home mortgages are fixed rate versus adjustable rate.

Fixed rate means that you agree on an APR (annual percentage rate) that does not change through the life of the loan, whereas, an Adjustable Rate Mortgage, better known as an ARM, means that rates and monthly payments can change, often tied to the U.S. Government Treasury Bills or some other form of "index", with the frequency of change dependent upon the terms of the loan.

Deciding on which way to go involves many variables. We suggest that you start by examining the fixed rate products available on the market. They are by far the most popular, and arguably with the least amount of risk. After evaluating several preliminary loan offers (quotes) for fixed rate mortgages, you can then venture into the world of ARM's to see if one of these products may be right for you. But, proceed with caution, and understand all the risks, alongside any potential benefits.

3. APR - APR, better known as the annual percentage rate, aka: "rate", is arguably the most important consideration you must examine when looking for a loan. The APR includes principle, interest, "points", fees, PMI (Mortgage insurance), and other costs associated with the loan. While all costs and terms are significant and affect the bottom line, we suggest that shopping rate is a very good starting point.
 

4. Loan Types: There are several standard loan products to look for, including 30 year fixed, 15 year fixed, bi-weekly mortgages, 1 month ARM's, 5 year fixed ARM's, 2nd Fixed, ARM's with a provision to convert after 5 years, lender buydowns, and discounted mortgages.

We think the best place to start, is to obtain quotes for a 30 year fixed rate loan, and then go from there. 30 year fixed rate loans generally produce the lowest monthly payments for fixed rate products, and they are relatively safe. Once you know where you stand with a 30 year fixed, after obtaining quotes from several lending institutions, then you can consider the possibility of exploring more exotic loan products. At this juncture, you will want to consult with those you trust, for good, solid advice and feedback on risk versus reward.

5. Loan Amount Qualification, Income: This can vary widely depending on you, your lender, and many other variables. However, as a rule of thumb, look at 2 to 2 ½ times your current household income, as a baseline to determine how much you can afford to borrow.

6. Loan Amount Qualification, Expenses: This is another broad category that varies from one lending institution to the next. However, there are two general factors to look at, and they are Housing Expenses (such as mortgage, property taxes, and insurance), and long-term debt (which can include credit cards, auto loans, etc.).

First, add all your expenses together. As a rule of thumb, you will want your expenses to not exceed 33% to 36% of your gross household income.

Second, examine your housing expenses only. As a rule of thumb, you'll want these expenses to not exceed 25% to 28% of your gross household income.

7. Employment and Credit History: Lenders generally want to take a look at your employment history so that they can see a pattern of stability and income. Lenders generally also want to take a look at your credit history, so that they can see a pattern of borrowing and repayment in your past. Lenders cannot discriminate and must use this information solely for the purpose of considering your ability to repay a loan. Also, many loan products are available for all kinds of customers, with varied financial backgrounds and histories.

8. Points: Points are one of the primary fees charged on the loan, and they represent the profit earned by the lending institution. One point represents one percent of the total loan amount, and points are usually tax-deductible (along with the interest paid on the loan). They are broken down into two basic types:

Origination Points - Origination Points are the fees charged by the lender, and represents their gross profit.

Discount Points - Discount Points are most often charged in association with a lowered interest rate. In other words, the Discount Points represents a dollar amount, as a fee for giving the borrower a lowered APR (lower than what the lender might otherwise charge).

9. Sub-Prime Loans: Sub-Prime Loans consist of loan products designed for customers with challenging credit and financial backgrounds, or, customers that are looking to re-establish credit. They can be significantly higher then the prime lending rate, with less favorable terms (Often times, the loans are for the short-term, such as 2 to 3 years). However, they do offer a venue for certain individuals, and they can allow customers to re-establish credit, or buy new homes prior to cleaning up a credit history, etc.

For some of you, this avenue may offer exactly what you're looking for. It's important to know that lenders who specialize in sub-prime loans are out there and want to earn your business. However, we advise that you proceed with caution. Be sure to gather sound advice from trusted friends and professionals, and understand all the risks versus rewards, prior to signing on the dotted line.

10. Short-Forms: The most important thing you can do as a consumer of loan products is to shop around and get several preliminary loan quotes for your consideration.

These are no risk, no obligation, preliminary loan offers. They take 30 seconds to 2 minutes to complete, they require no personal or confidential disclosure on your part, and they require no commitment from you.

We suggest that you obtain 3 or 4 offers. You can then examine and compare the terms, rate, fees, and all other pertinent information about the loan product, and the lender, at your leisure and in the comfort of your own home.

Loans-Directory.Org has categorized hundreds of online services that you can explore. You can also go to any search engine and find them from there. Look for a "privacy policy" on their website, as well as short, simple application forms that make sense and are relatively easy and quick for you to complete.

Also, take a quick look at the current interest rate for 30 year fixed loans, as well as the 6 month trend graph. We have set up a free webpage with this information, or you can find many graphs and charts via your favorite search engine.

We've enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, but never turn your back on your own common sense.

Publishers: This article may be freely distributed so long as the copyright, author's information and an active link (where possible) are included.

Disclaimer: Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

About The Author

Copyright 2005, by Loans-Directory.Org , This article is available in full format at: Home Loans , Tom Levine provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services.

Home Equity Line of Credit Loans

Home equity line of credit loans are a form of credit using one's home as collateral. Unlike home equity loans in which a homeowner receives a one-time lump sum of money, home equity lines of credit involve an approved credit limit that homeowners borrow money from.

Why Get a Home Equity Line of Credit?

Home equity lines of credit are great for paying unexpected expenses. Many prefer this sort of credit because the interest rates are much lower than credit cards. Once approved for a specific amount, the money is available for withdrawing. Homeowners can borrow from their line of credit for home improvement, car repairs, weddings, and so forth.

How is Credit Limit Determined?

The credit limit on home equity lines of credit are based on many factors. These include the home's equity, homeowner's income, and debt ratio. Although a homeowner may have sufficient equity and satisfactory credit, a huge credit limit will not be granted to individuals with high revolving credit. Lenders must be confident in a homeowner's ability to repay the money borrowed.
 

The majority of home equity lines of credit are established for a fixed period. During this period, homeowners are permitted to withdraw or write checks on the line of credit. After the fix period expires, homeowners can re-apply for another line of credit. Before credit is approved, lenders re-examine homeowner's credit worthiness. Upon review of credit, a line of credit is either approved or denied. Moreover, a homeowner may receive a decreased or increased from the previous limit.

Some lenders have stipulations such as establishing a minimum withdrawal amount, or requiring homeowners to keep a small outstanding balance. Furthermore, some home equity lines of credit require that initial withdrawals are made when the account is established. Examples of minimum withdrawal amounts include $300 or $500.

Home equity lines of credit loans are ideal for homeowners who do not need a large lump sum of money. Home equity lines of credit are more flexible than home equity loans. With a home equity line of credit, homeowners have the option of interest-only payments and variable interest rates. However, homeowners concerned about possible high interest rates, and those preferring a predictable monthly payment might consider home equity loans a better alternative.

To view our list of recommended home equity loan companies, visit this page: Recommended Home Equity Lenders Online .

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.