Home Equity Mortgage Loans | Home mortgage loans
Home equity loan is a good way of making funds available to run your business and create room for expansion. When well managed, the money could really help revive your dying business and prevent it from completely going into liquidation.Home equity loan is a type of loan that allows a home owner to use his/her home as collateral in order to borrow some money especially if it involves huge amount. They could be needed to finance major expenses e.g. medical bills, college education, home repairs, setting up of a business, reactivation of a dying business, etc.This kind of arrangement makes it possible to have a passive right to the property, but not to sell it until the debt or other obligations are taken care of. Some creditors would mandate the borrower to provide their credit history to show their past borrowing and repaying compliance. They would also like to know about their late payment and bankruptcy history.Home equity loan can be obtained from different areas such as Banks, credit union or brokers.
The source of the loan does not really matter much as the condition of repayment is virtually the same (with little or no difference). The important thing is for the borrower to be able to convince the creditor of his ability to pay back the money.What are the advantages of home equity loan?1. Bigger loan: It makes room for a bigger loan to be obtained to run your business.2. It creates less tension: Since in most cases the loan is obtained on a second mortgage term, the first mortgage takes priority in an event of default. This reduces the pressure or tension that the borrower faces should he be unable to take care of the payment for a particular month.3. It is safer: The lender considers a house safe enough to be used as collateral to obtain loan since houses don't easily lose their value. It is also impossible for you to run away with the house if you refuse to repay your money.4. Lower interest rates: It usually attracts lower interest rates compared to the use of credit card. ,,The increase in home mortgages 
Image by eric731 In the picture above, we see how banks were allowed to change the way they do business. Before, they had to accumulate money from the community to loan as a mortgage. Now they are allowed to accumulate money from the community and loan out many mortgages off the same amount of money. In the old system, the FDIC had to be created to protect the community from losing all their money if a borrower defaulted. Now, the FDIC only needs to cover a portion of the depositors money because if one person defaults it only affects a portion of the money, not the whole thing. That is why a bank allows defaulters to modify their loan. The bank knows the modified amount is only modifying the fictitious, created money, not the actual community's money. Yes, the banks lose some future money, but they did not lose actual money, since there was only a portion of the community's money that was actually invested in their house. What do you think?
LOOKING for a mortgage that will retire when you do? Or maybe you want to time a refinancing so that the loan is paid up when the kids head off to college. There are a number of lenders that would be happy to oblige. Customized mortgages aren't new.....
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Answer by Miss Emily
Every loan has an APR, what people refer to as "bad" is an ARM (adjustable rate mortgage). An interest only loan is usually amoritized over 30yrs. But yes, you are just paying interest only & NOT paying anything towards your principal. If after 30yrs. of paying Just the interest on say a $ 100K loan,,,, after 30yrs. you would still owe $ 100K, at which time you would sell the home or just refinance. Most people do not pay interest only on the same loan for 30yrs. If you have an interest only loan, it is because you couldn't afford to pay the principal as well when you first got the loan. You should contact the bank who holds your mortgage note & ask if you have a "pre-payment" penalty OR if it would be OK to make some payments towards your principal. If you're currently on an adjustable rate interest only loan, it would be better & safer to refinance to a fixed loan payment. Even if it is interest only, just make sure you ARE able to, if you want, to make extra payments towards principal.
Answer by Kim F
In an interest-only loan or mortgage the borrower only pays interest each month. This makes it cheaper than a conventional mortgage, in which part of each month's payment goes towards the principal and part goes towards interest. These loans have become popular because the monthly payments are lower, allowing borrowers to afford a larger home. However, these loans can be dangerous, especially in a down housing market. The interest rates are generally fixed for the first 1, 3 or 5 years. After that, they convert to a conventional loan, with a higher monthly payment. Most borrowers take on these loans because they assume they will sell the home before the interest rate increases. In a down market, they may not be able to sell. If they cannot afford the increased payment, they may have to default on the loan, and foreclose on the home. So, when the rate starts to adjust, you would need to refinance again. And, either get a fixed or another interest only adjustable. And, yes, I do believe you mean ARM. Although, if you have extra money every so often, you can pay down the principal in extra payments.
Answer by nashdude
In an 'interest only' loan you never pay principal down at all, just pay interest only. when the loan term is over, you still owe the principal in full. These work best when you're taking out a short term loan to, say, rehab a house that you intend to sell for more than you bought it for, so that you can reap the profit. These loans aren't for the average person. These loans are for various terms, but usually short term (1-6 months, 1 year, etc) and are almost always fixed rate.
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