Home equity loan questions
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| Sun, 03-12-2006 - 4:30pm |
I've posted here before, a long time ago. We've been in debt for so long, and every time it seems like we might be able to get ahead something else goes wrong. We've finally decided that we're never going to get out from under this ($36k in debt, plus student loans of $20k). We're going to talk to our credit union about a home equity loan. I know it's never recommended to use your home to pay of credit cards, but we don't use these cards, for years we've been paying the same amount over and over. Something like a car repair will come up, or child will get sick, and we'll have to miss a payment, then there's all the fees. So the cards are all closed accounts, we can't use them, and won't apply for more. Because of being late the interest is killing us, most are over 28%. If we can get a home equity loan, we can pay it off within 3 years.
I'm afraid to hope that we can get one. My husband talked to the bank just for info on rates, he says as long as we have enough equity, which we do, they will give us the loan because it's secured. I'm so afraid that they'll look at our credit report and turn us down. Has anyone gotten a home equity loan before, what does it entail, do you have to have perfect credit, and about how long does the entire process take?
I appreciate any help. Once we made the decision to do this I just want it done, but I'm nervous too.
Sheri

i don't have a home equity loan personally, but i work for a branch of a large bank here in the south that offers them. i don't work in that dept, so i don't know a whole lot about them.. but maybe i can help a little. also - i'm sure things are different depending on your state and what bank you choose to go with, but i can give you some info on how ours works:
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**most loans under $50,000 are ready to close in 24 hours. as you know though, certain restrictions apply and you may be needing much more than that. i wouldn't think that a larger loan would take more than 5-7 bus days (but that's me strictly guessing).
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**now, the home equity loan is a loan secured by the equity in your home. it provides you with a one-time lump sum cash amount. you repay it as you would any other installment loan in fixed monthly payments. the loan is fixed-rate and has a simple interest. that means your rate will never change and your payment will never increase. a good thing for you since it's ideal to budget with fixed payments.
**for the loan, it's just some paperwork and a meeting that you set up with a consultant. the paperwork should take you about 30 minutes to fill out, and your consultant will guide you through the entire thing, answer questions, etc. you don't have to have *perfect* credit to be approved, but you do have to have decent credit. i'm pretty sure that being accepted depends on the amount you are wanting to borrow with the credit that you have now..
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**also, i thought i'd leave you with this extra info i found from my bank's website:
HOME EQUITY LOAN DISCLOSURE
Closing costs and other fees are estimated to range between $150 and $1500, depending on the amount of your Home Equity Loan. will pay 100% of these closing costs for Home Equity Loans (a) secured by primary or secondary residence when 0.50% is added to the interest rate, or (b) not secured by primary or secondary residence when 1.00% is added to the interest rate. An example of a Home Equity Loan with a 1% margin would be if your loan amount is $50,000 and is secured by investment property, you will make 180 payments of $531.15 with an APR of 9.80%. market.]
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i would recommend doing what you're doing: asking a few questions here and there with a particular consultant in a particular bank and branch (i would recommend a small branch in a commercial area b/c they are usually dying for consumer (rather than commercial business) customers and will *love* to talk to *you* about *anything* other than commercial-type accounts and resources! :o) try to find someone who is willing to be honest and open with you.. someone is willing to tell you all that you need to know about their particular offers. it won't necessarily get you approved, but it might make you feel more comfortable about the whole situation. also - check around on different bank's (from your area) websites. most give a good bit of info on what they in particular offer that might be substantially different than the others. i doubt they quote specific rates b/c rates are constantly fluctuating, but they might post a range??
HTH!
good luck - and keep us posted!
-kara
HTH!
Thank you Kara, that information does help.
My husband spoke with our credit union, she just told him we could borrow up to 100% of our equity,which is about $36k. That will pay all of our bills. We have "decent" credit, meaning no deliquencies, but of course, $36k in debt. His credit is better than mine, if we had to be late with a payment I made sure it was on a card in only my name, so that only 1 of us would take the credit score hit.
He's going to meet at the bank tomorrow, to start the paperwork. She told him that we would have a check for the loan amount within 7-10 days, hopefully that's correct.
I appreciate your help.
Sheri
Sheir,
I have in the past had a HEL with our credit union and the process was fairly easy and quick. The fees were minimal and I believe we had the $ w/in a week. I know we borrowed up to 100% of our equity which made the interest rate higher. Our problem was the once we got the loan and paid off the ccs we started using them again! Dumb. I won't make that mistake again. Good luck to you!
I know we won't be using the cc's again. Most of them are closed, my dh has 1 that is open but with a small credit line. We'll keep that for absolute emergencies, but nothing else.
After struggling to pay these off for over 5 years, I just want them gone. I haven't been able to use them for at least 2 years, because they were all maxed out, and when I did use them it was for things like unexpected medical bills or car repairs. I'm not a shopper (anymore,lol) and I'm 100% sure we won't let this happen again. It's taken all the joy out of my life, and we're very lucky that it didn't destroy our marriage.
That's why I'm hoping this loan goes through without a hitch, we just need a little good luck now. Then we can get some money in savings so when the emergencies come up we're better prepared.
Sheri