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Aventura Real Estate Home Equity Loan Types And More
Piggyback
One of the most popular types of home equity loan is piggyback loan. This is particularly helpful if youre planning to buy a second Aventura real estate property but cannot come up with the complete 20 percent down payment usually required by conventional mortgages. You have the option to get a Home Equity Line of Credit (HELOC) for the 10 percent, for instance, you need to complete the mortgage. This, however, relies on your income, home value and credit rating.
Home Equity Line of Credit
HELOC is another popular home equity loan option. HELOC is flexible in case you decide not to use the loan in the last minute. Furthermore, if you decide to get this second mortgage on your Aventura real estate property, you can easily obtain them for one point over prime. Unlike fixed second mortgages, which go for around 8.5, HELOC is available at about 4.5.
Issues with HELOC
While HELOC are usually offered with little or no fees, it still pays to watch out for several issues surrounding the home equity loan. Firstly, when you are shopping for the loan, you must find out if there is pre-payment penalty. This is usually required if you decide to sell your property or wipe out your balance before the term of the loan.
In addition, you must also consider the current decline in property values. This means that credit limits are slowly decreasing for HELOCs. Nowadays, homeowners sometimes opt to draw all their equity and place them in a secure bank account.
Lastly, even though HELOCs are typically interest-only loans, you may want to opt to pay for the principal during the early stages of the loan. Take into account the current economy. While its certainly down in the dumps, there are great chances of it improving, and this will generally cause an increase in your interest rate and payment.
Mark Michael Ferrer
Aventura Real Estate
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