Home Equity Loans



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Monday, November 20, 2006

Home Equity Loan Rates Guide

Home Equity Loan Rates Guide
By: Daniel Roshard

Do you need to pay your college tuition fee? Does your home need
massive repairing? Did the addition of a new baby in the family
lead you to think of getting a bigger family car? Taking out a
home equity loan may be the quickest and most practical solution
to your sudden financial needs. However, you need to know that
while taking out a loan with your home as collateral is not as
simple as it looks.

A home equity loan does not come for free. You will have to pass
certain documents, get through credit rating standards, and pay
a variety of fees to get started.

What fees are these?

A Home Equity Loans costs consist of interest rates and
transaction expenses, also called closing costs, or the rates
linked with the successful closing of a home equity loan deal.
These include lawyers fees, application fees, credit reports,
title search fees, notary fees, insurance fees, property
appraisal fees, loan document preparation fees, and other
closing expenses.

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Normally, closing expenses average at between 2% and 5% of the
amount you loaned, so you should expect not to get everything
you borrowed initially. Be careful of mortgage lenders that
advertise no closing cost deals, because there is definitely no
truth to this.

Whenever you take out a Home Equity Loan, there is a price you
will need to pay for the convenience of getting money at once.
If the company says it offers no closing costs deals, it is
likely that it has already factored the fees into the interest
rate. If you're thinking of borrowing a huge amount, don't go
into these kinds of deals. However, it should be relatively
harmless if you're only planning to take out a small value.

In addition to the abovementioned fees, you will also have to
pay so-called points on closing. Points are service fees you pay
at only one time when the deal is sealed. They are related to
interest rates, so the more points you pay, the lower your
interest rates will become, which is not really a bad thing,
when you think about it.

To be able to understand and appreciate the presence of points,
mention it in dollar terms. For example, instead of saying you
are paying three points on your $20,000 home equity loan, you
can say you are paying $600 in points. This way, you will have a
better grasp of the amount you're shelling out, and you can more
effectively keep track of your cash outlay. Simply referring to
your costs in terms of small value 'points' can cause you to
lose track.

In sum, taking out a Home Equity Loan is not really expensive,
but you have to realize that it does not come for free. Whether
you choose to take out a standard home equity loan or a home
equity line of credit (the two types of home equity loans), you
should expect to face significant costs.

About the author:
Home Equity Loan Rates are extremely important for home owners
that wish to get a large loan, there are many different kinds of
home-equity.advice-tips.com and there is sense in learning
all the different risks involved.

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