Rock Solid: A Home equity fixed loan's practical merits


Imagine this: you've paid your mortgage bills faithfully for the past 15 years, but haven't had the guts to pull of a refinance to get lower interests and have paid almost half of the $120,000 you owe the bank when you bought the then $150,000 house.

Suddenly, there's an emergency -- you swallowed a good heaping of nuts and bolts and need serious surgery, or something to that effect, like sending the kids to college. The point is, you need money. But because of that dutiful paying, you haven't had enough per month
to put up a decent savings account. Then you realize that you only now owe the bank $65,000 and your housen is valued at $250,000. You, my friend, have a home equity of $185,000 and can get a home equity fixed loan close to that amount.

And I just saved your life.

Be sure, though, that you know what you're going to ask for before tap dancing to the bank and asking for a home equity fixed loan. A home equity fixed loan is a loan dependent on your home equity -- the figures of which are based on your principal debt and current property value. All you have to do to determine your home equity is subtract your principal from the value of your home.

A home equity fixed loan is a one time release of funds that have a shorter life span than the 15-30 years mortgages. This may encompass a period ranging from 10-15 years. It cannot be drawn from again and have fixed schedules and interest rates. These work well for homeowners who want stability in their finances and have no intention of borrowing more.

Home equity fixed loans may also be used to buy off mortgages and receive additional cash on-hand. One has to consider the different tell tale signs of opportunity.

Although seemingly constricting, a home equity fixed loan offers a steady rate of interest that other fluctuating loans cannot. Also, the single debt will not have the volatility and Murphy's Law propensity of a credit card, making sure that your borrowing is kept in check.

It is a safe, calculated gamble, to say the least, since there are no really daunting pitfalls that one may fall victim to in home equity fixed loans. There is no such thing as dependence on up today down tomorrow indexes, no complex calculations of real time gains and rates. A home equity loan is an upfront, simple basic loan based on your home equity which cannot be altered so as to produce further financing.

This ultimate action requires that the borrower think long and hard about his decision, since it will be set and almost immovable. Does that hotrod you've always dreamed of merit an application for a home equity fixed loan that you will have to pay for 10, 15 years?

It is, although clicheic, being on the safe side of finances. Which isn't such a bad side to belong to, since in the long term, a home equity fixed loan will not change much even if the whole market experiences a significant spike.