Home Equity Loan Lowdown

Beware of Abusive Lenders

The alarm bell is ringing for the home equity loan borrowers amidst the reports that home equity scams are increasing day by day. If you have your own home, then there is no doubt that it is your greatest single asset. If you if you agree to a loan that's based on the equity you have in your home, you may be putting your most valuable asset at risk. The solution: homeowners with low incomes or poor credit scores must be careful while borrowing money based on their home equity. Certain lenders tend to target such type of borrowers.

If you fall behind in your mortgage payments and face foreclosure, another lender might offer to save you from foreclosure by refinancing your mortgage and lowering your monthly payments. Before accepting the loan, look carefully at the loan terms. The payment may be lower because you repay only the interest each month. However, at the end of the loan term, the principal will be due in one lump sum. If you fail to pay that, you will lose your home.

Know Your Lender Before You Take That Loan

By Priya Jestin, Staff Writer

If you plan to take a loan against your home’s equity anytime in the near future, better beware of the many frauds and other problems that are associated with some lenders. If you have a bad credit, you are especially vulnerable. The Federal Trade Commission (FTC) has issued a warning to people urging them to be aware of such loan practices to avoid losing your home. 

I know it sounds scary and you begin to wonder if you could actually trust anybody. But there is no need for a panic attack. When you plan to borrow, try to keep a cool head and find out if the lender you approach is credible. Some lenders try to ‘steal’ your equity by asking you to pad your income in order to qualify for a loan.  Why do they do this? Because at some point of time, you will be unable to make your payments. The lender will then foreclose your home and take away your equity.

Loan flipping is another method used to scam prospective barrowers.  This entails a lender making an offer soon after you refinanced your home.  He may say you can take a bigger loan for a vacation or other reason.  If you accept the offer, he will refinance your original loan and then will lend you the additional money.  With each new loan, the lender or broker may collect new points or fees.   

How Does Your Lender Assess You?

--By Priya Jestin, Staff Writer

Taking a loan against your home’s equity is not a simple and easy decision. It is one that has to be mulled over, you need to examine the various lenders available, check their offers and decide on the loan that offers you maximum benefits. Now, before offering you that loan, the loan officer will assess you on various fronts and only if you match up to their criteria, will you get a great loan.

One of the most important things here is your creditworthiness. The lending institution considers your creditworthiness when deciding whether to extend a loan and how much of an interest rate you will pay. Your creditworthiness involves three things: your credit history, your income and the loan-to-value ratio. Lenders want to know how much you make and how long you've been at your job, as well as how long you have been working in your particular field.

They will look at your total debt-to-income ratio: How much of your monthly income goes toward paying the mortgage, credit card bills, car payment and other obligations, including the payments on the equity debt for which you are applying. Most lenders want to keep that ratio under 36 percent.

Do You Qualify For A Reverse Mortgage?

--By Priya Jestin, Staff Writer

Are you into your 60s and own a fairly decent-sized home? If you are in need of money, you can think about using the equity in your home. According to the National Reverse Mortgage Lenders Association, the higher federal loan limits have many benefits for older homeowners. With a reverse mortgage, senior homeowners can now tap into a larger portion of the equity in their homes.

If your liquid savings are not too high but you have a house with a lot of equity, then this product helps you better your finances. So, what is a reverse mortgage and how can it benefit the older generation. To get the benefits of this tool, you must fulfill certain requirements. Firstly, you have to be 62 or older for this.

You can take a loan on the house or in other words, you can pull out the equity in your home in the form of a loan. And what’s the best part about this loan? It doesn’t need to be repaid until you either move house, sell it or die. That means you have years ahead of you before you need to think about repaying that loan!

There is just one serious catch to the product. Your loan amount will depend on your age, current interest rate and other loan fees. To get an estimate of how much you might get in a reverse mortgage, check out AARP's "Reverse Mortgage Calculator" at www.rmaarp.com. AARP is an extremely useful and unbiased source of information on reverse mortgages. For more information go to AARP's very useful Web page on this topic.

Know Your Home Equity Loan

According to bankers, the recent fever to tap home equity has finally cooled. Now, new fixed-rate offerings are attracting homeowners to convert adjustable rates to more predictable payments. This way, clients are now taking home equity loans with fixed payments for five to 30 years. The loan comes at a fixed interest rate and at least a small amount going to pay off the principal every month.

Since conversions allow consumers to convert all or part of their adjustable rate balance to a fixed rate, increasing numbers of customers are now converting. Even banks are now promoting the fixed rate rather aggressively. With this method, you are essentially locking in a portion of the borrowed money at a fixed rate. This can be paid back in principal and interest. Madison.com reports:

Rates on home equity lines of credit are higher versus one and five years ago, while rates on fixed-rate home equity loans are lower than five years ago, said Greg McBride, senior financial analyst for Bankrate.com., an Web-based aggregator of financial rate information.

Read more: Getting a fix on home equity loans

Boom’s Over, Now Comes The Bust

Guess bad times shadow everyone. I mean until now I only thought about how bad things were for me. A high interest rate on my home equity line of credit was just the beginning of a long list of highs. And none of this is going to end anytime now thanks to the Feds. Since June 2004 it has raised short-term interest rates from 1 percent to 5.25 percent. This was with the intent of achieving a "soft landing" – an economic slowdown that reduces inflation without causing a recession

I have a feeling that things are not going to be so easy. At the end of the day, it’s us homeowners who will take a big beating. My only worry is if people like us will be able to tide over these hard times. Only time will tell.

Avoid That Loan, Use Other Options

Almost every expert worth his name is now busy advising people on how it is the worst time to take money from your home as average sale prices are falling, interest rates are rising, and foreclosures are way out-of-control. But what do you do if you are deep in debt and want to pay off those loans before your situation gets worse? Fool.com reports:

That's why Bills.com co-CEO Andrew Housser says that it's best to exhaust other sources of financing for debt consolidation before tapping into home equity. "Using your house to pay off unsecured debt can be very risky. If you choose this route, make sure you leave yourself some financial breathing room, so that if something unexpected does happen, you will not risk losing your home."

Read more: Defying the Bubble Babble

Know The Rules On Home Equity Loans & Property Exchange

Want to use our home equity to purchase an investment property and plan to do an Internal Revenue Code 1031 tax-deferred exchange? There are quite a few things you need to know about a 1031 exchange before you decide to make the exchange. Mortgage101.com reports:

Most tax advisers suggest renting your former home at least six to 12 months (to show rental intent) before making an IRC 1031 tax-deferred exchange.

Read more: Homeowners eye real estate exchange, hit legal hurdle

Here’s A Tale To Warn You Of Shady Lenders

Maria Rivera took a home equity loan of $10,000 to pay for home improvement costs. She was lured into taking the loan by ads that promised affordable loans for home improvement projects. Now, seven years after a contractor tore up her house without making the promised repairs, Maria is paying $122 every month for her home-equity loan and still has three years of payment left. And instead of a new bathroom, she was left with ruined carpets and a damaged support beam.

There are many such shady lenders spread across the country. They defraud customers out of hundreds of thousand of dollars by promising them easy, low-cost loans. Firstly, don’t ever take a loan against your home’s equity unless you really need it. And secondly, always take a loan from a reputable organization that has more than a few years of business behind it.

High Credit Card Debts? Don’t Worry, Pay It Off With A Home Equity Loan

High interest credit card debt troubling you no end? Why don’t you just take a loan against your home’s equity and pay off that damn debt and be free again? Why don’t you!! If you’ve seen even one such article on the Internet (apart from my introduction of course) just check who’s done the writing. My bet’s that almost all of them were written by mortgage brokers.

If you read that and heeded that advice, I can only offer you my deepest sympathies. First of all if you’ve been maxing your credit cards, you have a problem bro, and that needs to be sorted out. And you cannot sort it out by losing the roof over your head. Yes, that’s exactly what you will be doing if you take out a home equity loan. Bestsyndication.com reports:

For most people, this is their single biggest investment and financial asset. So, this loan to pay off unsecured debt is secured by the roof over their heads, which costs more each month when a loan is taken out against it.

Read more: Home Equity Loan to Pay Credit Card Debt, Bad Idea!

Lenders Don't Part With Their Money Easily

Home equity loans are still an attractive proposition because of their low interest rates. But there is one thing you need to know about this market -- lenders are very cautious about the amount they lend. Their priority is value of collateral and prompt recovery of the loan. Market-day.net reports:

Creditors prefer granting amounts less than or equal to the market value of your collateral. A borrower with exceptional credit history can expect amounts up to 125% of the collateral, while someone with a turbulent standing may get about 60% of it. There is more scope to borrow larger amounts as long as you satisfy the lender of your ability to repay the loan.

Read more: Homeowner Loans : A 3D View of Ownership!

Home Equity Loans: Wise Decision?

The past few years have seen numerous Americans establishing lines of credit secured by the equity in their homes or have borrowed a lum sum amount secured by their home. For marginal borrowers this can turn out to be highly risky as it exposes these families to the loss of their homes. Bestsyndication.com reports:

Prior to mortgaging or refinancing a home you should consider what your families finances would look like if one or more of your family members living in the home lost their job or came down with a serious illness.

Read more: The Use of Home Equity Loans - Wise or Not Wise?

Know How Your Lender Assesses You

Taking a loan against your home’s equity is not a simple and easy decision. It is one that has to be mulled over, you need to examine the various lenders available, check their offers and decide on the loan that offers you maximum benefits. Now, before offering you that loan, the loan officer will assess you on various fronts and only if you match up to their criteria, will you get a great loan.

One of the most important things here is your creditworthiness. The lending institution considers your creditworthiness when deciding whether to extend a loan and how much of an interest rate you will pay. Your creditworthiness involves three things: your credit history, your income and the loan-to-value ratio. Bankrate.com reports:

Lenders want to know how much you make and how long you've been at your job, as well as how long you have been working in your particular field. They will look at your total debt-to-income ratio: How much of your monthly income goes toward paying the mortgage, credit card bills, car payment and other obligations, including the payments on the equity debt for which you are applying. Most lenders want to keep that ratio under 36 percent.

Read more: What lenders look for

Arguments For & Against Home Loans

In the past few years a large number of Americans have established lines of credit secured by the equity in their homes or have borrowed a lum sum amount secured by their home. This can be an extremely risky business especially for marginal borrowers as it exposes these families to the loss of their homes. Bestsyndication.com reports:

Prior to mortgaging or refinancing a home you should consider what your families finances would look like if one or more of your family members living in the home lost their job or came down with a serious illness.

Read more: The Use of Home Equity Loans - Wise or Not Wise?

Take The Loan If You Need It, Not Because You Can

For many people today, refinancing their home may be one of the better options available, as their equity may have reached the required watermark. However, you don't need to take a loan against your home's equity, just because you CAN. Assess your needs, check if they are viable, and then only take a home equity loan. Bestsyndication.com reports:

One interesting recommendation is to use that money for something that has the same lasting power as your home – and your mortgage. Financing college educations for your kids is a pretty good example. Adding home improvements is another.

Link: Sorting Through Home Equity Loan Options

Don’t Make These 3 Mistakes When Taking A Loan

Home equity loans still are a wonderful source of credit. However, the problem with taking this kind of a loan is that if you are not careful, you can make some really expensive mistakes – mistakes so costly that you could even end up losing your home. Bestsyndication.com reports:

Borrowing too much money is a common home equity loan mistake. No matter how much money you borrow, you will have to pay it back. Consider this carefully before deciding on the size of your home equity loan. Remember, if you get a large loan and cannot make the large payments, you could be putting your home at risk.

Read more: 3 Most Expensive Home Equity Loan Mistakes

It’s not easy having a HELOC

Having a home equity line of credit (HELOC) is not an easy task. The problem with it is that you are forced to answer a couple of uncomfortable questions. Questions that may help you with your finances but are nevertheless, troublesome. One of the first things you are required to ask yourself is if you should keep the credit line, even though the rate has almost doubled in 21 months or refinance it.

The fact that credit lines are indexed to the prime rate meant that the good times couldn’t continue forever. Every time the Federal Reserve raises short-term rates, borrowers' minimum monthly payments go up. So now, the average rate on a credit line is higher than the average fixed-rate home equity loan. And if you go in for a 30-year, fixed-rate mortgage, you will find it even cheaper than the credit line.

Finance Education With A Home Equity Loan

Are you one of those many parents who are funding their child’s education? You are probably finding it pretty tough and now with interest rates shooting up, you could probably think of taking a home equity loan to cover your costs. Azstarnet.com reports:

Home-equity loans can be fixed-rate or variable, but because they're secured by your residence, they're likely to be offered at a somewhat lower rate of interest. Also, federal tax laws allow you to deduct home equity interest of as much as $100,000, no matter what the money was used for.

Read more: Personal Finance Home equity loan one refinancing option

Loan Interest May Not Be Tax-free in Your State

If you are considering a home equity loan (you are a brave one I must say!!) you are probably hoping that you can save tax on the interest you pay for the loan. In most cases, this would be the case. However, there are some states in which home equity loan interest is not tax deductible. So, it is important for you to check out the rules and regulations in your area before you sign up for the loan.

Another thing you need to watch out for are fees, charges and other extra costs that may be attached to your loan. Paying lots of points and fees could mean that you're not saving as much as you think with your home equity loan. Agreed, a home equity loan can be a smart way to consolidate debt, make sure you carefully research your decision--and weigh the pros and cons--before signing on the dotted line.

Home equity loan industry fraught with frauds: FTC

Home equity loans are one of the most popular type of loan facility available today and most people still borrow loans on their homes for purposes like funding a child’s college education or refurbishing the home and other needs. And the reason is not far to seek. Home equity loans offer some of the best terms in the industry – interest rates are still much lower than that for other loans. Because of this, many people are now even borrowing against their homes for holidays or for buying gifts for friends and relatives. I know this sounds ridiculous but that is what happens when you can get a loan for almost negligible interest.

Because this industry is so lucrative and the prospects are mind numbing, you must be especially careful and beware of the many frauds and other problems that are associated with some lenders. This warning is directed especially at people with a bad credit, since they are very vulnerable. And these frauds have bored so deep into the system that the Federal Trade Commission (FTC) was forced to issue a warning to people urging them to be aware of such loan practices. If you don’t take heed, you may end up losing your home, it warned.

I know it sounds scary and you begin to wonder if you could actually trust anybody. But a few simple tricks will ensure that you aren’t conned. When you plan to borrow, try to keep a cool head and find out if the lender you approach is credible. Some lenders try to ‘steal’ your equity by asking you to pad your income in order to qualify for a loan. Why do they do this? Because if you have a bad credit history, it is possible that at some point of time, you will be unable to make your payments. The lender is waiting for just such a moment to foreclose your home and take away your equity. There may be hidden costs associated with the foreclosure or you may be forced to pay exorbitant prepayment penalties. Don’t indulge such lenders and always read the fine print before you sign any documents.

Know Your Home Equity Loan

Whenever you plan to make an improvement on your home or purchase a new product using a home equity loan, it is important to study the exact nature and the long-term ramifications of such a loan. There are two popular options for home equity loans – the 15-year term with a fixed interest rate for the entire term or a 30-year payment term with a balloon payment due in 15 years. Associatedcontent.com reports:

Anytime you make a huge purchase, it is so important to do your homework. The market is constantly changing, what was true 3 months ago may not be true today.

Read more: Buying Guide to Home Improvement and Home Equity Loans

Seniors and Home Equity loans: Information Booklet

Last week, I’d written about seniors and home equity loans or rather about how they are not a compatible pair. Well, I’ve got some more information on this topic. I thought I’d share it with you guys. For financial advice for seniors on home equity loans, reverse mortgages and the like, I suggest you check the free special guide for seniors from the Federal Deposit Insurance Corp.

The special guide for seniors also includes a list of government resources that older Americans and their families can turn to for help on financial matters. If you want a hard copy, the FDIC will provide you with single copies free through the Federal Citizen Information Center if you order online.

Don't Borrow If You Don't Need the Money

Did you take a loan against your home’s equity? If yes, then you have something to worry about. According to RealEstateJournal.com, The Wall Street Journal’s guide to property, Americans who recently took home equity loans run the risk of owing more than their house is worth due to rising interest rates. Until recently, home-equity borrowing was a boon to consumers, allowing them to turn their houses into cash machines.

However, the higher rates are now fueling an increased interest in a different type of home-equity borrowing. People are now taking loans, which offer a lump sum and a fixed rate, instead of credit lines. These loans include popular facilities that allow borrowers lock in a fixed rate on some or all of their line of credit.

So why has the cost of borrowing risen so much in the recent past. You can blame the Federal Reserve Board for this drastic rise. The Federal Reserve Board has boosted short-term interest rates 15 times over the past two years, resulting in higher interest rates on home-equity loans.

All these problems make you wonder if a home equity loan is any good at all. While the housing boom was on, these loans made very good sense. However, now, interest rates on short-term home-equity lines of credit have sharply increased. And this, at a time when the housing market is at its lowest ebb. This leaves homeowners with a very small cushion to fall back on should they be unable to repay the money they borrowed. So, if you plan to take a home-equity loan, first determine when you will need the money and how soon you will be able to repay it. This will help you get a better deal.

You don’t have to pay junk fees on your home equity loan

While it is quite easy to get a home equity loan, sometimes borrowers are forced to pay ‘junk’ fees to get their loans. Sometimes, lenders charge you a loan origination fee, appraisal fee, credit report fee, processing fee, underwriting fee, flood certification, funding fee… the list is endless, so it is important that you stay away from such lenders. Mortgage101.com reports:

Virtually every local bank and credit union will eagerly make you a home equity loan or home equity credit line (HELOC) without any junk fees if you have a FICO (Fair Isaac and Co.) score around 700 or higher.

Read more: Beware of junk fees on home equity loan

You CAN lower the cost of your home equity line of credit

If you have taken a home equity line of credit against your home, you are probably one of the many consumers who have watched the rates double on them in the past two years. But that is no reason to fret and fume and raise your BP. You still have options available to you. Rocklintoday.com reports:

A few lenders, including Bank of America, Washington Mutual and Wells Fargo, offer hybrid credit lines that allow the borrower to set a fixed rate on some or all of a HELOC's balance.

Read more: Lowering the cost of a home equity line of credit

Are You Gripped by Hype?

Home is where your home is. The saying stands dearer when it is earn with a mortgage. Owning a house with a mortgage is like owning a stock purchased on margin. Mortgage companies undertake equity maximization program suggesting you that on putting the equity in your home to work earning income and building wealth. It is even recommended that refinancing needs to be done in the interest-only loan with lots of efforts on side benefits gained there from.

It has been found that there are several flaws in this idea. While it could work, it is very likely that execution costs (sales commissions and life insurance costs) would severely limit, or destroy, the projected benefits.

Are you game for it? If yes, you better go through these again. Market experts believe that many people give in to those schemes due to the hype created around the home equity loan benefits. Remember two things: insurance companies are lenders in disguise and equity index products don't provide full stock market returns. That is enough to caution you.

Refinancing an option for High Interest Current Mortgage

With each passing year over a span of years, mortgage rates have hit all time lows. Thousands of people have held the opportunity to save money on their existing home loan. Here refinancing makes an entry and changing the whole picture and equation in home equity. In case you feel drawn towards obtaining the latest mortgage rates, just apply online for either a refinance quote or a home loan equity quote.

A number of companies are offering top refinancing loan rates and options in the U.S. There are several benefits to refinancing your existing home loan. Home owners can also benefit from a lower refinancing rate by freeing up cash that can be used on much needed expenditures.

It is aptly said that saving makes us identify what earning is. Thus finding the right refinancing rate for home equity can be one of the best and safest ways for you.  So, grab your portion of knowledge for the best refinancing rates and packages that are available in plenty.

Local Experts for Home Finance Needs

Home finance has always been a great proposition for the bankers. It has been a domain where home finance professionals from across the country wait to compete for the best.
Whether you are looking for a new home loan, second mortgage, home improvement loan, debt consolidation loan or a refinance loan you should always look forward to the option of lenders exchange.

There are many companies that are making all possible strokes to help you. Internet as boon helps you with source for identifying low home equity loan rates. Designed to address customers' wish to make the home equity loans / refinance mortgage process are being made simple and easy. Moreover, while you fill in your requirement on the net for home equity loan, company arrange for experts to consider and comment on your demand for home equity loans / refinance mortgage, which really works in favor. Being locally available these experts directly offer you understanding of the possibilities with best possible rates cutting down on the pain moving from company to company in search of the product that fits you best.

Get rid of your credit line before it’s too late

There was a time when home equity lines gave homeowners access to money at rates lower than both fixed-rate home equity loans and first mortgages. However, they are quite painful to deal with right now. Interest rates have more than doubled in the last year or so and you are left holding a loan with an implausible interest rate. In some cases, people have found that the interest rate on their HELOC is more than the rate on their mortgages.

Equity lines are indexed to the prime rate. And the Federal Reserve Board has raised short-term rates almost 16 times since 2004. This has raised the prime rate from 4 percent to 8 percent. So, what do you do in such a situation? Dailynewstranscript.com reports:

If you have a home equity line of credit that you want to get out from under you have three basic options: 1) keep the credit line; 2) pay it off and replace it with a fixed-rate home equity loan, or 3) do a cash-out refinance on your first mortgage and pay off the credit line with the proceeds.

Read more: Best to get rid of credit line and get fixed-rate loan

Retirement fund for baby boomers

Baby boomers may not be role models when it comes to retirement funds. But they do have something that can help them live their retirement peacefully – massive equity on their homes. Mercurynes.com reports:

Many live in homes that have appreciated greatly in value in recent years as real estate prices have soared. Some financial experts believe that's going to be the boomers' salvation because they will be able to tap that home equity to help fund their retirements.

Read more: Home equity may be baby boomers' salvation

Tips on getting home equity loans online

Today, home equity loans are available online and the streamlined process online gives you results in just a day! The best part is that after you submit your application, your loan will be processed the first business day. Your funds can be dispersed in less than two weeks and the Internet offers the added benefit of being able to quickly compare their loan rates and fees with others. Bad-credit-loan-tips.com reports:

When looking at home equity loan costs, consider factors including terms, possible future refinancing, and upfront costs. Picking the right terms for your unique financial situation is just as important as finding low rates.

Read more: Fast Home Equity Loan - Benefits to Applying Online

Borrow only if you need to…

Did you take a loan against your home’s equity? If yes, then you have something to worry about. According to RealEstateJournal.com, The Wall Street Journal’s guide to property, Americans who recently took home equity loans run the risk of owing more than their house is worth due to rising interest rates. Until recently, home-equity borrowing was a boon to consumers, allowing them to turn their houses into cash machines.

However, the higher rates are now fueling an increased interest in a different type of home-equity borrowing. People are now taking loans, which offer a lump sum and a fixed rate, instead of credit lines. These loans include popular facilities that allow borrowers lock in a fixed rate on some or all of their line of credit.

So why has the cost of borrowing risen so much in the recent past. You can blame the Federal Reserve Board for this drastic rise. The Federal Reserve Board has boosted short-term interest rates 15 times over the past two years, resulting in higher interest rates on home-equity loans.

All these problems make you wonder if a home equity loan is any good at all. While the housing boom was on, these loans made very good sense. However, now, interest rates on short-term home-equity lines of credit have sharply increased. And this, at a time when the housing market is at its lowest ebb. This leaves homeowners with a very small cushion to fall back on should they be unable to repay the money they borrowed. So, if you plan to take a home-equity loan, first determine when you will need the money and how soon you will be able to repay it. This will help you get a better deal.

Loan application rejected? Learn a few home truths about home equity loans

Have you ever encountered such a situation: You own a home and now want to take a loan against its equity but you just cannot get a home equity loan or a loan of the exact amount you require. You may be surprised to know that having a home doesn’t automatically guarantee a home equity loan. The equity you have is equal to the value of your home minus the amount you still owe on it. So, if you purchased your home in the recent past, or if home prices have crashed in your area, the equity on your home may not be enough.

Also, when you approach a lender to borrow a home equity loan, the lender will assess your credit and financial situation. And here, your credit score, current employment and income play a very important part and your loan approval can depend on them. Of course, it is easier to get approved for a home equity loan than other types of loans, you still may not qualify if you don’t meet the lender’s requirements.

Even if you get the loan easily, don’t squander it away like a few people do. Quite a few people take a home equity loan to finance their vacations or gift buying sprees. Avoid such spending if you can afford it since your house is collateral for the loan. So, if for some reason you cannot repay, the bank or lender can actually repossess your house. As a rule, try to take a home equity loan only if you need to consolidate your debts, or make additions or repairs to your home and that too, only if you're absolutely certain that you'll be able to make the monthly payments.

Why you need a home improvement loan

You love your home and are very proud of it. You now wish to remodel certain parts, fix up the house or maybe just paint it. These things don’t come cheap and if you haven’t set money apart for this purposes, you have a few options that will help you get your house spruced up.

One way to do it is by purchasing the goods and services required with your credit card. This may be an easy and quick option but is by no means, a cheap method. Don’t forget the high rates of interest on credit cards! Another option is to get a home improvement loan, which is a 2nd mortgage that will fund the project. You will find there are many different lenders available that offer different terms and interest rates. You need to know how much the improvements are going to cost. The best part of a home improvement loan is that you have added value back to your home. Maintaining your home and keeping it in great condition will add value for years to come. Whether it is landscaping, roofing, an addition, or a kitchen remodel, a home improvement loan is one way to finance your project.

Home equity and sale profits

Many people believe that there is a corresponding effect between a home equity loan and the profits from the sale of a home. If you take a home equity loan to carry out improvements to your home, then there is a corresponding price hike in the value of your home thereby increasing your profits. Bankrate.com reports:

However, if you use it to buy a car or consolidate debts or just put it in the bank, then your cost in the property is not changed.

Read more: Home equity loan doesn't affect sale profits

Home equity loans are not for education funding

According to recent research by the Consumer Bankers Association (CBA), an increasing number of homeowners are using the equity on their homes to fund the education of their children. Higher education today has become a costly affair and every bit counts. While helping shoulder the burden of education is a good thing, it should not be at the cost of losing your home. Surprised? Well there are quite a few people who are taking loans against the equity of their homes to fund their children’s education.

The CBA research shows that nearly 5 percent of home equity has been used by homeowners to fund the higher education costs of their children. However, if indications are anything to go by, all this may soon be a thing of the past. As the housing scene witnesses drastic changes, there will definitely be an impact on the home equity loan scene. And consequently, this will lower the number of people taking these loans.

So now that borrowing against equity is no longer a good option, parents may have to look to alternative resources to pay for the college education costs of their children. It may not be such a bad thing altogether since alternative student loans provide loans at very competitive interest rates. They also offer innumerable other benefits, according to Christopher S. Penn, director of AlternativeStudentLoan.com.

The best thing about the loans offered by AlternativeStudentLoan is that parents no longer have to shoulder the increasingly heavy load of college education. In this type of loan, the student is the primary borrower. Private student loans, also have competitive interest rates, no points, no closing costs, no collateral and no out-of-pocket fees or application fees.

Lite Income Documentation for Home Equity Loans from Chase

Chase, one of the nation’s leading home equity lenders recently launched easier income-documentation requirements for home equity loans. This allows brokers and correspondent lenders approved by Chase to help their home equity customers take advantage of this new development. Rismedia.com reports:

Borrowers with a FICO score of 700 or more are eligible for the Lite Income Documentation option for lines or loans up to $350,000. “With Chase home equity lines and loans, originators can further enhance the borrower experience for their best customers,” said Kimberly Salvo, Home Equity National Sales Manager.

Read more: Chase Launches Lite Income Documentation for Home Equity Loans

Shopping for a home equity loan? Beware of frauds

If you are a prospective borrowers, better beware of the many frauds and other problems that are associated with some lenders. If you have a bad credit, you are especially vulnerable. The Federal Trade Commission (FTC) has issued a warning to people urging them to be aware of such loan practices to avoid losing your home. Bestsyndication.com reports:

Loan flipping is another method used to scam prospective barrowers. This entails a lender making an offer soon after you refinanced your home. He may say you can take a bigger loan for a vacation or other reason. If you accept the offer, he will refinance your original loan and then will lend you the additional money. With each new loan, the lender or broker may collect new points or fees.

Read more: Home Equity Loans Pros and Cons - Warnings From The FTC and What to Look For When Shopping For a Home Loan - Bad Credit Refinancing

Check out this group for some ethical loan advice and options

Since we cannot undo the damage done by the predatory lending methods employed by unscrupulous lenders, what is the next best thing that can be done? Help homeowners by providing them with fair and ethical home loans. At Lenders Who Care, a non-profit, national organization, individual lenders who adhere to strict guidelines, offers home buyers home lending education and services based on honesty and ethics. Rismedia.com reports:

“We are committed to helping consumers during what is likely the biggest purchase of their lives – buying a home. We like to think of ourselves as the ‘Good Housekeeping seal of approval’ in home lending,” says Cindy Allen, First Vice President.

Read more: Non-Profit Group Offers Home Buyers Ethical Home Lending Advice and Options

Are home equity loans passé?

Time was when just about everybody worth his home, took a home equity loan. These loans were the most popular means for homeowners with a mortgage to borrow. The main attraction was the low interest rate and the tax-deductible nature of the interest. While these loans are still good, they may not be the best solution to your problems.

While the housing boom was on, these loans made very good sense. However, now, interest rates on short-term home-equity lines of credit have sharply increased. And this, at a time when the housing market is at its lowest ebb. This leaves homeowners with a very small cushion to fall back on should they be unable to repay the money they borrowed. If you plan to take a home-equity loan, first determine when you will need the money and how soon you will be able to repay it. This will help you get a better deal. Buffalonews.com reports:

A home-equity line of credit charging 4 percent two years ago is now over 7.5 percent and is expected to hit 8 percent by the summer says, Greg McBride, a senior analyst at Bankrate.com, which tracks loans. That's because a line of credit, the most popular way to borrow against home equity, is a variable-rate loan and rates have gone up as the Federal Reserve has made its hikes.

Read more: Home equity loans are still useful, but rising rates can increase the risk

Do you really need that loan?

Have you heard about the parents who wanted to give their son the best grad gift ever? They financed the new SUV, which their son fancied. And guess where the money came from? The loving parents took a loan against the equity of their home!

I didn’t believe it and still don’t. I mean I can understand a parent loving his/her child but going to such an extent just shows how short sighted the parents really are. It’s one thing to love your children and shower them with gifts. But there are limits to everything. And here, they crossed the limit when they took the loan for this vehicle.

I know this sounds a bit preachy but do you really believe that the roof over your heads is irremovable. Imagine the plight of these parents if they are unable to repay the loan. They’ve lost their home and for what? A vehicle?

There has been an increasing trend among people to cash in on their home’s equity for the simplest of reasons. I know of a woman who wanted to go to the Bahamas on vacation. However, her financial situation was not too good. So what does she do? She goes straight out, takes a loan against her home, and is on the next flight to the Bahamas.

Now with interest rates rising on these loans, it is not too difficult to imagine such people finding it difficult to make their payments. But guess what, it needn’t be this way. Just because these loans are easily available, you don’t have to take them. Borrow against your home only if you have a need that is important like refurbishing your home or completing your education – anything that will help you in real terms.

Here's something that might make interesting reading: Pitfalls

Home equity loans’ existential dilemma

Let me be honest here. I’ve never considered home equity loans to be bad. I mean, tapping into your home’s equity is a good way to pay for necessities like your child’s higher education or for making an important purchase or for some other equally important task. But there is a school of thought that believes that home equity loans are just one more means of helping Americans drown into a sea of debt. Well, when you come to think of it, you could make wrong use of your home equity loan like using it to finance your vacation or a fancy car.

And today, more than ever before, being in debt is okay and people don’t even bat an eyelid when they see their neighbors driving themselves into bankruptcy. All this makes one wonder if we as a nation are mature enough to use our home equity loans for the correct purposes or should this type of loan be done away with totally? What’s your say? Lewrockwell.com reports:

Home equity loans are more popular than ever as people borrow against their home to feed their spending binge. Today, average homeowners owe nearly 50% of their home's value. Twenty years ago that figure stood at 30%. Can't you just picture the modern-day needlepoint plaque? "Home, Sweet Credit Line."

Read more: Good Times, Noodle Salad, and the State

Why pay cash when you can finance your home & save taxes

You’ve probably been working hard and saving up for a comfortable, debt-free retirement. However, if want a retirement property, don’t try to pay cash – it’s not always the best option. What you could do instead is finance your home by choosing from a wide variety of options. Businessweek.com reports:

According to bankrate.com, the average interest rate is lowest on the mortgage, next lowest for the HELOC and the home-equity loan. The rate on a home-equity loan is fixed, while a refinancing loan can be either variable or fixed; a HELOC is variable and could turn out to be costly if rates continue to rise.

Read more: Buy The Nest, Keep The Egg

Shady home equity loans could leave you with no money and no home!

It’s not easy being Zoraida Colon. She not only suffered the injustice of having her house torn up without any of the promised repairs being carried out, she also has had to $122 every month for a home-equity loan for the past seven years! Timesleader.com reports:

Builder Brad Marks and partner Edwin Rivera targeted mostly low-income Hispanics through Spanish-language ads that promised affordable loans for home improvement projects, prosecutors said. The pair then pocketed the loans and hired shoddy subcontractors or no one at all to do the work. Marks pleaded guilty to federal fraud charges and testified against Rivera at a trial last year that ended with his conviction

Read more: Victims, duped into shady home-equity loans, discuss loss

Not all debt is bad

Freedom from debt is something that all of us long for. And this freedom extends to our homes. But if experts are to be believed, debt is not bad, or rather not all kinds of debt are bad. They would have us believe that mortgage is not such a bad idea after all! According to them, your home is like a piggy bank. The bank is full with money you've already put in. And you can take out this money with a home equity loan.

There are however certain rules to be followed when you take a loan against your home. Always use the loan amount to buy something that will add value to your home. Don’t try to take the loan for something as frivolous as a vacation or a depreciating asset like a big TV. If you are taking the loan for such a purpose, then remember, it is as good as pouring money down the drain.

It’s not easy having a HELOC

Having a home equity line of credit (HELOC) is not an easy task. The problem with it is that you are forced to answer a couple of uncomfortable questions. Questions that may help you with your finances but are nevertheless, troublesome. One of the first things you are required to ask yourself is if you should keep the credit line, even though the rate has almost doubled in 21 months or refinance it. This, believe me folks, is a pretty tricky and confusing question. If you remember your math, then this is the time to crunch those numbers.

You are probably wondering why make such a fuss about something as basic as a home equity line of credit. Well, until recently, it was something that didn’t require too much fuss. They offered rates that were lower than those on fixed-rate home equity loans or first-lien mortgages.

But this is no longer the scene today. The fact that credit lines are indexed to the prime rate meant that those good times couldn’t continue forever. Every time the Federal Reserve raises short-term rates, borrowers' minimum monthly payments go up. Since 2004, the rates have been raised so many times that now the prime rate has gone up from 4 percent to 7.75 percent.

So now, the average rate on a credit line is higher than the average fixed-rate home equity loan. And if you go in for a 30-year, fixed-rate mortgage, you will find it even cheaper than the credit line. So now, you are left with just a couple of options. You can keep the credit line, pay it off and replace it with a fixed-rate home equity loan, or do a cash-out refinance on the first-lien mortgage and pay off the credit line with the proceeds. The benefit of opting to keep the credit line is that you will be able to pay interest on the amount owed and nothing more. If however, you can stand the higher payments, it might be better to refinance the credit line into a fixed-rate home equity loan. At present, the rates on home equity loans are roughly the same as those on home equity lines of credit.

Home-equity loan deduction

This is a query that most people have: how do you calculate the percentage of interest that is tax deductible on your home equity loan. Well let’s give you a lowdown on how exactly you cold do it. First a little information – there are quite a few variables that you must consider while calculating the proper amount of deductible interest on mortgage or home-equity loans. These variables include your filing status, the fair-market value of your home, origination dates of previous mortgages and remaining debt.

One of the first things you will need to do is get the IRS Publication 936, Home Mortgage Interest Deductions. This book will give you a thorough explanation of how such calculations are made. It also includes a flowchart to help determine if all or part of your mortgage or equity interest is deductible. You can either pick up a copy of the book or download one. Thestate.com reports:

The second thing you might consider getting is a good accountant.

Read more: Home-equity loan deduction can be tricky

Home equity loan industry fraught with frauds: FTC

Home equity loans are one of the most popular type of loan facility available today and most people still borrow loans on their homes for purposes like funding a child’s college education or refurbishing the home and other needs. And the reason is not far to seek. Home equity loans offer some of the best terms in the industry – interest rates are still much lower than that for other loans. Because of this, many people are now even borrowing against their homes for holidays or for buying gifts for friends and relatives. I know this sounds ridiculous but that is what happens when you can get a loan for almost negligible interest.

Because this industry is so lucrative and the prospects are mind numbing, you must be especially careful and beware of the many frauds and other problems that are associated with some lenders. This warning is directed especially at people with a bad credit, since they are very vulnerable. And these frauds have bored so deep into the system that the Federal Trade Commission (FTC) was forced to issue a warning to people urging them to be aware of such loan practices. If you don’t take heed, you may end up losing your home, it warned.

I know it sounds scary and you begin to wonder if you could actually trust anybody. But a few simple tricks will ensure that you aren’t conned. When you plan to borrow, try to keep a cool head and find out if the lender you approach is credible. Some lenders try to ‘steal’ your equity by asking you to pad your income in order to qualify for a loan. Why do they do this? Because if you have a bad credit history, it is possible that at some point of time, you will be unable to make your payments. The lender is waiting for just such a moment to foreclose your home and take away your equity. There may be hidden costs associated with the foreclosure or you may be forced to pay exorbitant prepayment penalties. Don’t indulge such lenders and always read the fine print before you sign any documents.

Do you know the details of home equity loans?

Yesterday, I explained in short the difference between home-equity loans and Heloc or home equity-based lines of credit. While these loans are excellent and offer a much lower interest than other types of loans, it would be helpful to you if you study these loans in detail before taking the plunge. Timesleader.com reports:

If you’re thinking about a home-equity loan, consider when you will need the money and how soon you will be able to repay it. Rising interest rates favor the fixed-rate terms of home-equity loans (now about 7.8 percent), but lines of credit may still be better for incremental expenditures like college since you pay interest only on the outstanding balance.

Read more: It pays to study details of home equity loans

Home equity loan or HELOC? The choice is yours

Now that we’ve begun to understand home equity loans and how they work, let us now expand our sphere of knowledge on this issue. One of the first things you need to know is that there are two main lines of credit in home equity: Home equity loans and a home equity line of credit, or HELOC. To put it simply, HELOC is a variable-rate loan, whose rate is typically priced at a certain margin higher than the prime rate.

Meanwhile, a home equity loan is both a fixed-rate loan and a self-amortizing loan. That means that the monthly payment is large enough to both cover the interest expense and pay down the principal balance over the life of the loan. Both these loans are second mortgages. In case you cannot decide which line of credit is right for you, you should first be able to answer a few questions: Is the loan right for you depending on what you plan to do with the money. Also try to find our your level of flexibility in your monthly spending and the terms of the two loans.

Is a holiday worth the roof over your head?

Are you tempted to use your home-equity debt to pay for your next vacation or probably you want to buy gifts for your friends and family or spend the money for airline tickets. If yes, you are neither alone, nor the first one to do such a thing. You may sometimes not be spending the money directly. You are probably using your home equity debt to pay off your credit-card balances, which seem to have spiraled out of control. But if you allow yourself to borrow from your home-equity loan for such spending, you should first know of the risks involved in doing such a thing.

Until recently, people usually spent their home equity debt on solid investments – investments that brought some kind of return. The money was used to pay for college or renovating the house or even to start some business. However, today, consumers have woken up to the fact that equity loans are cheaper when compared to other lines of credit. So, they use it to consolidate their debt and use the money to pay for things that don’t require the use of this line of credit.

The culprits here are the numerous advertisements that entice you to take these loans for say, a holiday. What generally happens is that people are taken in by these ads and apply for a home equity loan. It generally takes around four weeks to get the money. This money comes in a lump sum and you have to repay them through equal monthly payments at a fixed rate for a certain specified period.

And here is one of the biggest pitfalls that you may find yourself in if you’re not careful. The interest you pay on the equity debt is tax deductible. But remember with this loan, you are placing your home on the line as a collateral for the funds you receive. And unlike credit cards, which are unsecured, this is a secured loan. So, while you can use the bankruptcy option in the case of credit card debt, there is no such avenue for you in the case of a home equity loan. So, in effect, you cannot walk away from this debt, even in bankruptcy.

Home equity loans: Are they any good today?

There was a time when home equity loans and lines of credit were the most popular means for homeowners with a mortgage to borrow. The main attraction was the low interest rate and the tax-deductible nature of the interest. While these loans are still good, they may not be the best solution to your problems.

While the housing boom was on, these loans made very good sense. However, now, interest rates on short-term home-equity lines of credit have sharply increased. And this, at a time when the housing market is at its lowest ebb. This leaves homeowners with a very small cushion to fall back on should they be unable to repay the money they borrowed. If you plan to take a home-equity loan, first determine when you will need the money and how soon you will be able to repay it. This will help you get a better deal.

Home-equity loans are still your best bet

Home-equity loans are still one of the most popular ways for homeowners with a mortgage to borrow. With home equity loans, the interest is much lower than on other forms of consumer borrowing and, the best part is that the interest you pay on loans up to $100,000 is tax deductible. Contracostatimes.com reports:

If you're thinking about a home-equity loan, consider when you will need the money and how soon you will be able to repay it. Rising interest rates favor the fixed-rate terms of home-equity loans (now about 7.8 percent), but lines of credit may still be better for incremental expenditures like college since you pay interest only on the outstanding balance.

Read more: Money tips

125% Home Equity Loans

You face major expenses when you pay your son’s college tuition or maybe it’s your daughter’s car payment and you consider taking a new loan to get through these big payments. However, what is available to you are expensive loans or credit options that will in the long run hit you hard. Before you lose heart... There are cheaper alternatives.

Mortgage refinancing is the cheapest form of borrowing available and it's even better when it’s a home equity loan.

Home equity loan lets you borrow on the equity you have in your home.

Equity is nothing but the difference between the current market value of the property and the amount you still owe on the mortgage. In simpler terms equity is the amount, if any, you would receive after selling a property and paying off the mortgage.

But what if you have not yet built up any equity in your loan? The loan providers have come with options for this situation too. Your option is a 125% home equity loan.

Your lender will first value your home and come with latest value and then will look at your current mortgage value and the amount you still owe on it.

I can explain 125% home equity loan better with an example – If the appraised value of your home is $100,000 the lender will go up to 125% of the appraised value and is prepared to offer up to $125,000 on your home.  So, if you still owe $60,000 from your first mortgage then that is deducted from the total probable loan amount giving ($125,000-$60,000) which is $65000 - the maximum amount you can get through the new loan.

Lenders offering 125%home equity loan can also decide on the amount by looking at your credit score. Others might be interested in how long you have lived in the home as a factor and the minimum requirement is 3 months. It’s the best form of borrowing, in my opinion, especially when you have major expenses.

Taxes - Savings and Deductions In Home Equity Loans

Scouring around for tax information on refinanced mortgages has been my latest errand almost every homeowner I know has refinanced and surprisingly not many were bothered about the taxes. But, now that the tax time is near every one wants to know about deductions and savings. So here are a couple of points...

Charge-deductions: There are points when you refinance and these points are there to calculate charges on loans taken out by you. The usual rate is one point for every one percent of loan amount. This is where you can get some deductions. These charges or points can be deducted and if this not your first time refinancing you can deduct the remaining points from your previous loan. The points from the present loan will be deducted over time.

There are tax savings: Up to a loan amount of $100,000 on home equity this is true. Even how you used the $100,000 is not a concern, so you can be relieved.  However, if you borrowed more than $100,000, the whole scenario changes and questions regarding how you spend the amount and should you be taxed the minimum tax etc are all raised. So, all those home improvement you made or the fancy cars you brought are all going to be scrutinized if your home equity loan amount was over $100,000.

The $100,000 clarification: This point is better explained with an example. If you had taken out a home equity loan of 190,000 and your loan amount of the first mortgage was only $100,000 you can deduct the whole amount. The difference between the new loan and old mortgage, if over $100,000, you are in the taxable bracket.

Most of us are sitting pretty by cashing out on home equity and though we have all have heard about the changes in interest and the ripple effects on our monthly cash outflow, surprisingly, few of us are really clear about taxes and deductions in refinancing.

Home Equity Loans - Still In Vogue

To all those people who say home equity loans are passé, I have to say, it’s still a great way to refinance. Specially, if home values are still high in your area or have come down to a respectable sane amount after the zoom in prices in the last couple of years. Agreed, maybe it’s does not create mass hysteria like it did before but it could be your ticket out of huge credit card debts.

So what do lenders look into before extending a loan?

1. Your credit worthiness i.e. your, credit rating and income.
2. The amount of outstanding debts you have
3. The appraised value of your home
4. The amount outstanding on your first mortgage

How much money can you get on a home equity loan? Taking all the above points into consideration home equity loan providers can in the best case scenario extend up to 85% of the appraised value of your home minus the amount outstanding on first mortgage.

Things to ask your loan provider:
1. Length of the loan extended
2. Get info on how you can get access to your credit line by check or credit card or both.
3. Is there a minimum withdrawal requirement while opening account
4. After account is opened are there minimum/maximum withdrawal preconditions.

Questions pertaining to; time of the loan, withdrawal and renewing credit lines:
Some home equity loans come with a set fixed time or a draw period when you can withdraw from your account. Some plans may require you to pay all the outstanding balance, while others you may be allowed to repay your outstanding amounts over a fixed period and this needs to be verified. You will be in most cases able to renew your credit line after the withdrawal period is over. If this does not happen you may not be allowed to borrow additional funds.

Home equity loans are still a great option if you are reeling under debt but remember your home is the collateral.

Tips for the cash-poor and house-rich elderly

New federal loan limits enable older homeowners to tap into a larger portion of their home-equity with a reverse mortgage. The elderly need not give up or sell the title and the best part is that the loan need not be repaid till the owner moves, sells or dies. When the loan is repaid, any remaining equity is distributed to the borrower if he or she is alive or to the late borrower's estate. In addition, the repayment amount never can exceed the value of the home.

Elderly borrowers can resort to any kind of home loan and take up fixed monthly payments, lump-sum payments, line of credit or a combination of these. Another advantage is that as the money received is a loan it cannot be called taxable income nor will it affect your Social Security or Medicare benefits. The only apparent catch in this is that the amount of money you borrow depends on your age, current interest rate and other loan fees. Also a factor is the newly appraised value of your house and mortgage limits set in your area by Federal Housing Administration

Cash there for elderly homeowners: gives more details.

Understand LTV or no equity loans

If you are on a quest to find out about home equity loans, chances are that terms like "125% LTV Loan" or "No Equity Loan" have confused you. LTV indicates the "loan to value ratio" between the market value of a home and the percentage of that value that is owed by the owners to mortgage lenders. The 125% is the percentage of your home-equity you can borrow. "No-equity" loans (another name) have made it possible for homeowners to borrow more than their home is actually worth.

These loans are aggressively marketed and makes enough cash available to pay off credit cards and other installment debt, such as auto or student loans. The interest rates on LTV loans tend to range from 13% to 16% and in some cases more than double the rate of normal 30-year fixed mortgages much higher than the more conventional home equity loans.

LTV loans came as an offshoot of the government-insured home improvement loans in the early 1990's and were mainly used for home improvement projects to increase the value of the property. However, now the 125% LTV loan is most often used for debt consolidation, which is not comforting.

Fees for LTV loans are also higher than for the traditional home equity loan and this together with the interest rates can be steep. This loan is a cross of secured and unsecured loans and also puts your home at risk. Another paradox is that it is the truly cash-strapped who are opting for this particular loan.

By the way, interest paid on any portion of the loan above the home's fair market value is not considered mortgage interest, and will not be deducted at tax time. It would be cheaper to combine a traditional home-equity loan with an unsecured personal loan rather than getting a no-equity loan.

More on LTV loans: Here

Cash-in on your home-equity for a small business

If starting a small business is your dream and you are a homeowner you could find your capital in your home equity. Lenders using your house as collateral offer home equity loans and that means you risk losing your home. Therefore, before, you embark on a venture keep in mind that if your business fails you lose both home and business!

Home equity loans are popular because of low interest rates and tax advantages on interests. Lenders also offer large amounts after deducting the mortgage amount due from the new appraised value of your home. There are different types of home equity loans offered according to your business venture’s requirements. Some loans require huge balloon payments at the end of the term of loan and others have high monthly payments which if defaulted could leave you homeless. There are others, which require up-front fees and closing costs or annual fees.

Read more about using Home Equity Loans to Finance Your Small Business: Betting the ranch on a dream

Ever heard of Reverse Mortgages?

There is a National Reverse Mortgage Lenders Association that helps people tap into their home equity. Old homeowners can draw from their older home equity loans with a reverse mortgage owing to a higher federal loan limit. Homeowners are still in the dark about the reverse mortgage process. This is growing in popularity though.

This type of loan allows senior citizens to draw out their home equity as a loan without having to sell the title. Well, there seems to be an advantage here, which is the loan doesn’t need to be repaid until the homeowner moves away, sells or dies. The downside is that you are stuck with it if you are not planning to die or move away!

Whenever you repay the loan, any remaining equity is distributed to the surviving borrower, or if the borrower is no more, this gets transferred to the estate. Moreover, the plans claim that this income is not taxable, and hence it won’t affect your Social Security. Some gains, huh!

Rockland Home Loan Market Cooler

In the Rockland County, the number of available homes has increased. The number has topped 1,000, well above the 597 single-family homes that were up for sale in the final months of 2004. The prices are sky-high and the interest rates are also rising steadily. Home buyers with a home equity loan are taking longer to sign a contract. Home sellers on the other hand are looking to rein in grandiose expectations for the profits from selling their homes.

In Rockland, both houses and condos are taking a longer time to sell. The number of buyers has reached the saturation point. Despite fewer buyers, home prices and home equity loans are on the rise by double digits in the fourth quarter. Homeowners are taking advantage of the appreciation of their home rates and the related home equity loans and are trying to cash in.

The number of condos for sale in the county rose 78%, while prices climbed 9.6% to a median of $281,000. In Orange County, condo prices rose more sharply.

Read the story here