Online Home Equity Loans

Written by Beth Hrusch
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Home equity loans are a popular way to get needed cash. Why? Home equity loans allow the home owner to use equity in his or her home to get access to needed funds. Low interest rates and tax-deductability, as well as the convenience of having an account from which to draw at any time, make these loans an efficient and convenient way to borrow money.

The Online Loan Process

Equity can be considered a built-in source of cash for the home owner. From the lender's point of view, these loans are a good risk because they are secured by the borrower's greatest asset, the home itself. The limit of the loan amount is determined by figuring the value of the home and the equity already in it. The lender gains an interest in the home should the borrower default.

Online lenders provide applications that can be printed out or sent in over the Internet, making it cheaper for them to do business. This saves money for both parties, often resulting in lower fees. The process works in the same way as a trip to the local bank, with the lender wanting to know information about the purpose of the loan and the borrower's financial status.

The wisdom of using home equity as a source of cash instead of a traditional mortgage can be determined by looking at long-term goals. A relatively short pay back term is ideal for these types of loans, whereas a large loan that stretches out over a longer period may be better served with a second mortgage. A loan expert can help the borrower make the right decision.


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