Truth in Lending: Some tips on Home Equity Loans

So you want to take that trip to paradise? Add a new room tot he house? Pay off those credit cards?Most consumers are not sure how a home equity loan works and whether or not they should even get one.. Here you will find important information about home equity loans.

1. Most people  already have a mortgage and the lender who loaned you the money on your house is a great place to start if you are in the market for a home equity loan. Just like insurance agencies, lenders will sometimes apply discount incentives if you give them reperat business. This can save you a substantial amount of money in the long run. Some lenders will even reduce or eliminate origination fees.

2. If you choose to go with another company then you will have to refinance your house, effectively ending your current mortgage and making it obsolete. All of those years you spent paying off your mortgage will be completely wiped out.

3. There are no closing costs associated with a home equity loan and you don't have to pay PMI (private mortgage insurance) either.

4. Consider that you are attaching additional debt to your home. Just like your mortgage, any missed payments can put you at risk of losing your home. Now that you have tacked on even more debt, this means your payments will be higher. make sure you are comfortable making rthese higher payments before you sign on the dotted line.