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03 Dec 12 Home Equity Line of Credit Tips for the New Year

Some people are unaware that home equity lines of credit are considered a “2nd mortgage” and thus you must already own a house to be eligible for this type of financing. These home equity lines are considered a second mortgage because the home is used as collateral for lending purposes. Using a credit line to borrow against the equity in your property has been a popular in the United States for the last few decades. Today, 2nd mortgage lenders are extending these HELOCs through several types of loan programs.

Tax Deductibility on Home Equity Interest

Smart Home Equity published a good article about tax deductibility on the topic of home equity-credit lines. The issue of deducting interest on loans up to $100,000 has become a concern as many borrowers are not clear about limitations. We strongly suggest discussing this with a CPA who is well versed on the mortgage interest deductions for 2013.

You will find most loans come with variable interest rates, some come with attractive low introductory rates, and a few come with fixed rates. You also may find most loans have large one-time upfront fees, others have closing costs, and some have continuing costs, such as annual fees. You can find liens with significant balloon payments at the end of the term and others with no balloons but with higher monthly payments. The bottom-line is that there are home equity products that make sense for your situation and loans that do not make sense for you financially as well.

The FTC reminds us to review the home equity contract carefully before you sign it.  Read the FTC warning about home equity lines of credit.

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19 Jan 11 Why Debt Settlement is Becoming Popular with Homeowners

Just a few years ago, homeowners could wipe out all of their variable interest credit card debt by signing documents for a home equity loan that promised to refinance all of their unsecured debt into a fixed rate home equity loan.  When the housing market crashed in 2006, so did the home equity solutions that enabled homeowners to make credit card problems disappear. Unfortunately with no equity, lenders were not interested in offering debt consolidation home loans.

With no equity, there was no collateral so the second mortgage and bad credit debt consolidation loan programs disappeared and debt relief solutions have shifted once again.  Many homeowners were lured to debt settlement which was once considered taboo by homeowners because consolidating debt was clean and simple with second mortgages.  Unlike a consolidation loan that pays off the outstanding balance, debt settlement is a negotiation process in which a legal team convinces you credit card lenders to accept less money.  Debt consolidation loans pay off 100% of the debt and debt settlement typically pays off 40-60% of the outstanding credit card debt. In most cases a debt consolidation loan will improve your credit and debt settlement will hinder your credit for a few years.

The problem today is that there are very few debt consolidation loan solutions available, because the housing market and mortgage industry have been so battered. The reality is that most homeowners do not qualify for home mortgage refinancingor an equity loan that enables them to consolidate their debt. Most homeowners do qualify for debt settlement, so it is becoming more popular.  Many homeowners consider debt settlement rather than filing a bankruptcy because the credit rebounds quicker with debt settlement than it would with a chapter 7 bankruptcy.  Every situation is unique though, so discuss your financial goals with a loan officer, attorney and finance advisor in which you trust.

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18 Jan 11 Debt Refinancing with Equity Loans

Millions of homeowners have figured out that one of the best methods for refinancing credit card debt is to roll it into a fixed home equity loan rate.  In a recent Smart Home Equity article, the suggestion to utilize the simple interest of a second mortgage was hammered home.  They also noted the tax advantages that come with swapping credit card interest for an equity loan.

There are several types of home equity loans to choose from:

Read the original article > Home Equity Loans for Consolidating Debt.

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