Let’s say you are a Boca Raton real estate owner or at least hope to be, you may want to learn a little about home equity loans. After all, they can be lifesavers for men and women trying to purchase their own homes throughout Palm Beach County, as well as the rest of South Florida.
A home equity loan is often referred to as a second mortgage and it allows homeowners to borrow money using the equity they have already built in their homes. The interest on the loan is tax deductible, which brought home equity loans to popularity in the 1990s when the economy was not so good.
A home equity loan is often referred to as a second mortgage and it allows homeowners to borrow money using the equity they have already built in their homes. With a home equity loan, homeowners can borrow up to $100,000. The interest on the loan is tax deductible, which brought home equity loans to popularity in the 1990s when the economy was not so good. Yet, they are still used on homes for sale in Boca Raton today.
There are two types of home equity loans that could make all the difference in the world to a potential buyer. One type is a fixed rate loan and one is a line of credit. A fixed rate home equity loan provides the borrower with a lump sum payment. It’s assumed that the borrower will pay the loan off over a set period of time with interest. The payments are usually paid monthly and remain the same amount over the entire life of the loan. The interest rate also remains the same over the lifespan of the loan.
A line of credit home equity loan works with a variable interest rate and uses the same principles as a credit card. It generally even comes with a credit card. Borrowers will be approved for a certain amount by the lenders. The borrower can then use this money by using the card or the special checks that the lender will provide. These payments will also be made monthly. However, the monthly payment will vary depending on what the current interest rate is and how much money was borrowed that month. When the term of the loan is up, any outstanding balances borrowed must be paid in full.
Home equity loans are a good option over other loans because the interest rate on them is generally quite low and is definitely lower than the interest on credit cards and other loans. Because of this, it makes good financial sense to pay off a credit card loan while using a home equity loan. It allows the homeowner to have one single monthly bill, a lower interest rate, and a loan that is partly tax deductible.
Home equity loans have many advantages for lenders as well. After the lender has collected on the original mortgage, they then are able to collect more payments and more interest from their Boca Raton luxury homes.
About Berkshire Hathaway HomeServices Florida Realty:
Berkshire Hathaway HomeServices Florida Realty serves 19 counties throughout Florida with over 40 locations and approximately 1,800 Sales Professionals. The full-service brokerage company, founded in 1999, is a subsidiary of Lennar Corporation, a Fortune 500 company and is a franchise member of the Berkshire Hathaway HomeServices’ network, one of the few organizations entrusted to use the world-renowned Berkshire Hathaway name. The company offers residential and commercial services as well as seasonal rentals, property management, REO & Foreclosures, corporate relocations, referral services, title, home service plans, and personal concierge services. Berkshire Hathaway HomeServices Florida Realty ranks in the Top 10 in the network among 42,000 Sales Professionals, 1,200 offices throughout 47 states. The company is the overall No. 1 fundraiser for The Sunshine Kids Foundation, having generated more than $3.37 million since 2001. Visit www.BHHSFloridaRealty.com.