If you’re thinking about getting a home equity loan or home equity line of credit, shop around and compare options. Compare financing terms offered by banks, savings and loans, credit unions and mortgage companies. Shopping around and comparing different options can help you get better terms and a more affordable deal, which is important when financing is secured by the value of your home.
Using your home as collateral
What does it mean to use my home as collateral?
You use your home as collateral when you borrow money and “guarantee” the financing with the equity in your home. This means that if you don’t repay the financing, the lender can keep your home to pay off your debt.
Refinancing a home, getting a second mortgage,
taking out a home equity 당일대출 or a home equity line of credit (HELOC) are common ways people use their home as collateral to obtain home equity financing. But if you can’t repay the financing, you could lose your home and the mortgage amortization you’ve accumulated. The accumulated amortization on your home mortgage is the difference between what you owe on your mortgage and how much money you could get for your home if you sold it. High interest rates, finance charges, and other credit and closing costs can also drive up the cost of borrowing money, even if you use your home as collateral.
How can I reduce the risks of taking out a loan by putting my house up as collateral?
Consider your options and your budget. Be aware of the risks involved in using your home as security or collateral. If you can’t pay the money back, you could lose your home to foreclosure. Talk to a lawyer, financial advisor, or someone else you trust before making any decisions. There are dishonest lenders trying to target seniors, low-income homeowners, and borrowers with credit problems as clients. They offer them financing based on their mortgage amortization, and not based on their ability to pay the balance owed. If you fall behind on your payments, the lender may try to declare your financing delinquent and send you a notice of delinquency, which is usually the first step in the foreclosure process .
What are the warning signs that you are dealing with a dishonest lender?
Dishonest lenders may contact you to offer you a supposedly convenient financing deal. They might say that your credit history doesn’t matter. They will try to pressure you into accepting more expensive deals with less favorable terms and will pressure you to commit before giving you a chance to investigate and consider other options. You need to know that legit lenders will give you the time you need to review the terms of the offer in writing, and they want you to understand them. They will never ask you to sign blank documents or hide key facts and terms from you.
