The 125 home equity loan is just what it sounds like. A traditional home equity loan can be for up to 100% of the equity that is in your house. 125 home equity loans provide you with an additional 25% on top of the home's equity.
125 home equity loans are second mortgages. Borrowers have regular mortgages to pay every month in addition to the 125 loan. The amount that can be borrowed will be 125% of the appraised value of the home minus the amount that is being paid on the first mortgage.
This form of loan can really help homeowners who are in need of a cash lump sum, but don't have enough equity from their house to meet their financial needs. Homeowners might need to have money to send their children to college, do some major home improvement project, or have medical bills or other types of emergencies that they need to have cash for. There are some drawbacks when it comes to 125 home equity loans also.
The biggest advantage to a 125 home equity loan is obviously that homeowners can not only tap into the equity into their home for cash, but also receive an extra amount to help fund their cash needs. This type of loan may be preferable to personal loans which may carry higher interest charges. With a 125 home equity loan you may also be able to deduct part of the interest, whereas with a credit card or personal loan the interest is not tax deductible.
There are also several disadvantages to 125 home equity loans. The first big disadvantage is there will be closing costs to take into consideration Closing costs can run several thousand dollars and there may be other fees as well.
125 home equity loans come with higher interest rates than for a regular home equity loan. So higher interest rate charges is another potential disadvantage. However, the rate of interest will still be less than most credit cards or personal loans.
One potentially big risk to a 125 home equity loan is that the leverage on the loan could make it hard for homeowners to sell their houses. If the value on the home depreciates it will make it even harder for the homeowner to sell due to the fact that they will have to pay the lender back on the 125 loan. Because the borrower already got more money than the house was worth to begin with, a lower value on the house will make it more difficult for the homeowner to pay the lender back.
As you can see there are several advantages as well as disadvantages to a 125 home equity loan. Before making a final decision on one, you will need to weigh the pros and cons. You may also want to speak with a financial adviser to see if this is the best option for you. - 30462
125 home equity loans are second mortgages. Borrowers have regular mortgages to pay every month in addition to the 125 loan. The amount that can be borrowed will be 125% of the appraised value of the home minus the amount that is being paid on the first mortgage.
This form of loan can really help homeowners who are in need of a cash lump sum, but don't have enough equity from their house to meet their financial needs. Homeowners might need to have money to send their children to college, do some major home improvement project, or have medical bills or other types of emergencies that they need to have cash for. There are some drawbacks when it comes to 125 home equity loans also.
The biggest advantage to a 125 home equity loan is obviously that homeowners can not only tap into the equity into their home for cash, but also receive an extra amount to help fund their cash needs. This type of loan may be preferable to personal loans which may carry higher interest charges. With a 125 home equity loan you may also be able to deduct part of the interest, whereas with a credit card or personal loan the interest is not tax deductible.
There are also several disadvantages to 125 home equity loans. The first big disadvantage is there will be closing costs to take into consideration Closing costs can run several thousand dollars and there may be other fees as well.
125 home equity loans come with higher interest rates than for a regular home equity loan. So higher interest rate charges is another potential disadvantage. However, the rate of interest will still be less than most credit cards or personal loans.
One potentially big risk to a 125 home equity loan is that the leverage on the loan could make it hard for homeowners to sell their houses. If the value on the home depreciates it will make it even harder for the homeowner to sell due to the fact that they will have to pay the lender back on the 125 loan. Because the borrower already got more money than the house was worth to begin with, a lower value on the house will make it more difficult for the homeowner to pay the lender back.
As you can see there are several advantages as well as disadvantages to a 125 home equity loan. Before making a final decision on one, you will need to weigh the pros and cons. You may also want to speak with a financial adviser to see if this is the best option for you. - 30462
About the Author:
Tab writes on various subjects of interest to him, with the main objective of educating people on 125 home loans as well as home loans in general.
No comments:
Post a Comment