Home Equity Loans and Startup Cost: Considerations
Starting Your Business with a Equity Loan for your home
When you take out a equity loan or line of credit, you are borrowing money against the equity in your home. If you overextend yourself, you may put yourself at risk of foreclosure. Thus, before obtaining a home equity loan, you should review your entire financial situation and shop around for the loan, that fits your situation best.
Know your Cost
Get information about the loan. Know your cost. Including the interest rate, term of loan and closing costs. Will interest be variable, as is common with home equity loans, or will it be at a fixed rate? If the rate is variable, what rate cap does the lender offer? Will you be able to convert the loan to a fixed rate loan if you later choose?
Should you choose a Loan or Line of Credit?
You will have the option of obtaining either a equity loan, or a home equity line of credit. With a loan, upon closing you would receive payment of the amount borrowed.With a line of credit, you will typically receive a check book, and will be able to write checks against the equity in your home up to the amount of the line of credit.
Know your Fees and Costs.
Know the fees associated with your equity loan. Some lenders will charge an annual fee with a home equity line of credit, whether or not you actually use it to borrow money.
Know the terms of repayment, and the amount of any fees that might become due upon repayment.
Equity loans work differently, though. For one thing, banks have more say over the rates charged on those because they typically keep the loans on their books, rather than sell them off to third-party investors.
For another thing, banks use yields on shorter-term bonds, such as two-year or five-year Treasuries as a guideline for their equity loan rates rather than yields on long-term MBS. Those shorter-term yields are much more sensitive to the level of the Fed-controlled fed funds rate than they are to the long-term economic outlook
Home Equity Loans
Refinance Home Mortgage
Private Mortgage Insurance
Tax Lien Certificates
Wrap Around Mortgages