Homeowner Loans

By Doherty • March 25th, 2011
Chandigarh Properties - Real Estate India - Up...

Homeowner loans are based upon the equity one has in their home, or, if the loan is to make home improvements, based upon how much money the home will be worth after the improvements are made.

Many people realize that they can add to the value of their home by making large home improvements. These improvements tend to be quite costly, however, and most people do not have the funds available for such work. Homeowner loans can help such individuals achieve their goals when it comes to home improvements.

Homeowner loans are secured by the borrower’s property or home. Secured loans offer much lower rates than unsecured loans and, at the current time, are at an all time low. For this reason, many people are deciding to apply for a homeowner loan to take advantage of the current market interest rates.

To get a homeowner loan based upon the value of your property, you can get a basic home valuation which will determine how much your property is worth. The loan will be based upon the equity you have in your property which is defined by the amount your home is worth less any amount you owe on the home. If you have substantial equity in your home, you can apply for a homeowner loan based upon the basic home valuation. You will be able to get all or part of the equity from the lender.

If you are planning an extensive renovation, requiring one or more outside contractors, you may be able to apply for a homeowner loan based upon the value you will have in your property once the renovation is complete. Those who are doing a large conversion or addition to their home may qualify for such a loan. In addition to getting a basic home valuation, these individuals will need a statement from the contractor or contractors regarding the work that is going to be performed. In many cases, the lender will pay the contractor directly for the work, to make sure it is getting done. In some cases, the lender will allow you to make the payments yourself.

Other people get homeowner loans to consolidate debt. A homeowner loan based solely upon the equity one has in their home can usually be used to pay off debt lingering on high interest rate yielding bank cards and thereby achieving one low monthly payment. There are many reasons why people borrow money using homeowner loans. Home improvements and debt consolidation are two of the most common reasons. Others include financing education or making large purchases. Homeowner loans are generally made for a shorter period of time than a mortgage. Most lenders require the loan to be paid in full within five years time.

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