Home Equity Loans For The Self-Employed

Fri, 08 May 2020 07:45:00 -0400

Those of you who are among the ranks of the self-employed may have already learned that it is more difficult to get a loan - let alone a home equity loan. The good news, though, is that it is possible. Here is some information and tips about how you can get a home equity loan if you are self-employed.

The truth is, first, that you will find it more difficult to get a loan because you are self-employed. Some lenders will make it more difficult than others when you try to prove the amount of income you earn. You may be asked by one lender to provide statements for two years, and another one may ask for three years worth of proof. This means that you can probably rule out a no doc loan, too. Or find a lender that does not require any income verification. (Keep reading)

Another thing that you will need to watch for - concerning your own finances - is how much debt you already have. All lenders look at the debt-to-income ratio when considering giving a home equity loan, and usually require a maximum of 50-60%, which includes all mortgages and loans. It seems, though, that it may be a good idea to stay as far from this number as possible when you are self-employed.

You will also want to check over your credit report before you apply, to make sure that there are no inaccurate statements on it. Depending on the lender they like to see at least one person on the loan have a TransUnion credit score of 595 or above. Correcting these is not too difficult, once the problem has been resolved, but you will need to wait about two months before the corrections actually show up on your credit score. If you have less than two years of good, solid income, you will most likely have to pay a higher interest rate. A good credit score, though, will help this to stay reasonable.

Right now, self-employment is becoming more popular. Many lenders still do not have ways to provide for the needs of those of you who are in this category. New products are being developed, though, to meet the rising numbers of those who are leaving the commercial workplace. It may take a while, however, before there is some serious competition and a lessening of the stricter requirements.

Home equity loans can be obtained simply and quickly if you are looking $75,000 or less. With a simple application completed, with little to no income verification required, a completely remote process, funding in 48 hours after approval, with no appraisal and no lawyers involved. Home Equity loans have never been so easy.

Something that you will need to especially consider is that a home equity loan adds another monthly payment to your bills. It also is secured by your home, which means that a lien will remain on your house for the duration of the loan, or until you sell or refinance your home. Despite popular belief a lien holder cannot force a power of sale for non payment. Although you can tap into 85% of your homes equity with most secured loans it is ideal to stay at 80% or less to be sure you can refinance your home down the road.

You may find that one or two lenders will definitely give you a higher interest rate. By looking around, however, and getting several quotes, you can find a lender who will give you the home equity loan you want - with reasonable rates. Compare them carefully, noting things like the interest rate, the fees, and repayment terms. Interest rates are important however do not get too hung up on the rate. Sometime increasing your monthly cash flow makes more sense for your piece of mind and the cost of borrowing may be less than you think. Consult a professional such as a Mortgage Broker to help you navigate things. Also watch out for any home equity loan that has a prepayment penalty in it – you don’t need it.

If you made it this far you are likely interested in a home equity loan that is fully open, only registers a lien, is flexible on credit, has flexible repayment terms, a low interest rate, quick to fund and with no appraisal or lawyers. Then I suggest you start looking here http://www.townfinancial.ca/secured-loans-bfs

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Why Get a Home Equity Loan?

Thu, 07 May 2020 16:52:10 -0400

If you're a Canadian homeowner, chances are that you've been overrun with offers from finance companies to lend you money based on the equity you have invested in your home. A home equity loan is a loan extended to you that is secured by your home. The amount of the loan is based on how much 'equity' you have invested in your home. The basic explanation of 'equity' is 'the difference between your home's value and how much you still owe on the mortgage'.

In other words, if you bought your home for $125,000 and put $20,000 down on it, financing $105,000, then your equity in your home on the day that you close the deal is $20,000. Now imagine several years pass. You've paid off $15,000 toward your mortgage - but at the same time, the value of your house has increased to $175,000. Your equity in your home is now $85,000: $175,000 (your home's current value) - $90,000 (the amount you still owe on your home) = $85,000.

A home equity loan allows you to turn the equity you have in your home into cash by borrowing money and using your home as collateral to insure that you'll repay it. If you default on the loan, depending on the company they may be able to force sale of your home. Other lenders only place a lien which does not give them the power to force sale for non payment but they will remain against the title of your home and in the event of a sale or refinance they will collect their money at that time. Most of them will also send the loan to collections to attempt to collect the monies ahead of time. Make sure to read the fine print.

There are many reasons that people apply for home equity loans, though most fall into a few broad categories. The reason for taking out a home equity loan will often determine what kind of loan you apply for.

Debt Consolidation

By far one of the biggest reasons that homeowners apply for a home equity loan is to consolidate their debts. If you have outstanding debt to several different creditors at several different interest rates, it's often to your benefit to consolidate all those into one loan payment, potentially at a lower rate too. To do that, you can take out a home equity loan for the amount that you owe on all your debts together - or more - then use that money to pay off all your outstanding debts in full. By doing that, you trade making several payments each month for making one payment, which is often less than the amount that you've been paying on all of the debts combined. This is because you're also trading in the higher interest rates on your credit cards and loans for a lower interest rate on one loan. Chances are that you've also set a fixed time to pay back that loan, most often 10 years, though it could be as little as 3 years or as much as 15 years depending on the lender and amount being borrowed.

Home Improvements

If you want to make improvements or repairs to your home, it only makes sense to get the money OUT of your home to do it. Home improvements are one of the top five reasons that homeowners give for taking out home equity loans. If the reason for making improvements is to increase the home's value or prepare it for a sale, then you should definitely take a look at the home improvements that return the most on your investment.

Weddings, Vacations and College

Special events like weddings and vacations are the third most popular reason for taking out a home equity loan. For a wedding or other special event, where there will be multiple payments made to different merchants, a home equity line of credit is often a better choice than a lump sum home equity loan.

If you would like to learn more about secured loans and to see what you might qualify for please visit https://www.townfinancial.ca/secured-loans

Brad Plummer | Referral Mortgages - Blog #home equity

Home Equity Loans For The Self-Employed

Why Get a Home Equity Loan?