Maine Home Equity Loan Information

There are many different home equity loan options. Some can be a better fit than others based on your situation, mortgage rates, and what you need the loan for. The Maine home equity loan information offered in this blog will help you understand your options.

Types of Home Equity Loans

Cash-out Refinance

A cash-out refinance pays off your existing mortgage and replaces it with a new one. The new loan covers the balance of the old loan, the extra amount you are taking out and applicable settlement costs. Because you are paying off the existing mortgage, rather than getting a new loan as a second mortgage, the rates may be better than a second mortgage. This is essentially a traditional refinance except that you are extracting equity in the home. Those additional funds are given to you in one lump sum. When evaluating a cash-out refinance, compare the interest of your old mortgage with the new one. If the new loan rate is lower, then it may be beneficial. Otherwise, you should look into other options and preserve your first mortgage rate.

Home Equity Loan

A home equity loan is a second mortgage on top of your first mortgage. With this loan, you borrow a specific amount to be paid back over a specific amount of time, either at a fixed rate or a variable one. Second mortgage rates tend to be higher than first mortgage rates. Settlement charges also still apply.

Home Equity Line of Credit (HELOC)

A home equity line of credit usually has an adjustable rate that \”adjusts\” when the prime rate moves. HELOCs are open-ended, so they are similar to credit cards. The lender sets your maximum line of credit. You can access money up to that limit as needed. Your payment reflects the running balance. As your balance drops, the remaining credit may still be withdrawn. Credit limits may be changed by the lender when significant changes occur in the real estate market.

Find out about annual fees, cancellation fees, and mandatory balances or withdrawal requirements. Similar to credit cards, HELOCs can be changed by the lenders at any time. This loan type may be great if you are uncertain about needing the maximum amount of the loan. However, be aware that the credit limit can be reduced, limiting the total funds available.

Maine Home Equity Loan Information

All home equity loans are determined by the current market value of your real estate and the balance of current loans. You can estimate your equity by contacting a local real estate consultant for a market analysis. Mortgage companies will order appraisals to determine a more exact amount before approving the loan. Be careful not to pull out more equity than you realistically need. Also ensure that the new mortgage payments are within your budget. All home equity loans use your property as a lien, meaning you are in danger of foreclosure if you are unable to make payments. This Maine home equity loan information is for reference only. Consult with a local mortgage professional for up-to-date interest rates, closing costs, and other alternatives.

About Mini Major

Mini views the purchase or sale of a home as a major life transition that usually evokes a wide array of challenges and emotions She brings her strong analytical, communication, and mediation skills to that process. For buyers, she helps to assess realistic goals and maps out a facilitation strategy that is uniquely designed to meet their individual styles with limited stress. For sellers, she provides honest, factual information necessary to set the right price and, together with the extraordinary resources of the Bean Group, provides state-of-the art marketing materials to present that property with appeal to the most appropriate potential buyers.

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