Getting a Home Equity Loan
Have you ever heard the phrase “second mortgage”? A second mortgage is another name for a home equity loan. Most loans require some kind of collateral. A home equity loan lets borrowers use the value of their home as collateral. Are you ready to learn more about home equity loans and how they work? Then let's take a closer look.
What is a Home Equity Loan?
A home equity loan works a lot like most other loans. The borrower applies for a loan from a bank or another financial institution. If the borrower gets approved, then they receive a lump sum of money that they will pay back in regular installments.
Unlike other types of loans, however, the borrower is borrowing against the value of their own home. Therefore, the amount of money that the borrower receives will depend on the value of their house. Usually, an appraiser will have to inspect the house before the loan can take place.
What is a Home Equity Line of Credit?
Another option is called a home equity line of credit, or HELOC. Like we said in the previous paragraph, a home equity loan is a lump sum of money. Like a home equity loan, the borrower in a HELOC borrows against the value of their home. However, instead of receiving a lump sum, the borrower in this case gets an open line of credit. As long as they continue to pay back funds, they can borrow against their line of credit on a revolving basis.
How Can I Get a Home Equity Loan or HELOC?
If you are considering a home equity loan or a HELOC, you'll want to start by considering your best loan source. In this case, small local banks and credit unions usually provide your best choice. Here's why: Any type of home equity loan will probably require excellent credit. This is especially true at large, impersonal banks. If you don't have amazing credit at these places, you have virtually no chance of getting any sort of home equity loan.
However, you may have a bit more wiggle room at community banks and credit unions. If not, these places tend to at least be more personal and accommodating then larger banks. In other words, you may find people at small financial institutions who will be willing to help you find alternate financing options.
How to Find Your Home Equity Source
How can you get started finding your home equity source? That's where Bundlefi comes in. At Bundlefi, we connect clients with their local banks, credit unions, and other financial institutions that bolster the community. Start by taking a look at Bundlefi now to compare financial institutions for free.