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There are many home equity lenders that are available to lend you money on your home but there are a few things that you need to be sure of before you sign on the dotted line. Make certain when you are going over the paperwork that you ask if your home equity loan rate is fixed or a flexible rate. Many lenders will start you out with a low rate around 3 percent but 6 months to a year into the loan you will notice that your payment is going up in price due to the interest rate hike. At the time you notice the rates going up you may have the option to lock in your rate but it will cost you between $50 and $250 depending on which lender that you deal with. The worst lender that participates in this action is Fifth Third Bank, to lock in a rate after your rate has increased it will cost you $99 but you will not get the first rate you were paying you will be changed to the rate you are now paying.
The term home equity refers to the monetary amount between the estimated market value of a home and the amount that is owed on the mortgage, if any. Ideally, the market value of the home will keep rising as the monthly payments on the mortgage will reduce the amount of the loan.
Home equity rates sometimes do not continue rising as they are expected to. Local, regional, and national economic and political conditions could all have a negative effect on home equity rates. Overbuilding in some areas could result in too many homes on the market within a narrow price range, causing home equity to stay stagnant over even decline.
Areas of high unemployment will have higher foreclosure rates, plus causing many homes to remain unsold for a long time. Where employment is dominated by a single industry or large employer, home equity rates are particularly vulnerable.
Some areas with a high income population and a diversified economy, plus many educational institutions may see consistent home equity growth, as there may be more buyers than sellers and desirable homes will continue to rise in value.
Home refinancing is a great way to use equity in your home, or to get a lower monthly mortgage payment. The current economic situation causing substantial depreciation in market values on homes make it difficult to refinance in many cases, but there is still opportunity available for many home owners. Rather than shelling out funds for cosmetic improvements on your home, a down payment on a business, or another major purchase, consider a cash-out refinance option. This allows you to use the equity in your home without touching liquid reserves in your financial accounts, and it can be used for whatever purpose you choose. If you don't want to touch the equity in your home, you can opt for a simple rate-and-term refinance. This allows you to reduce your total monthly mortgage payment, and if you don't want to pay closing costs, they can be rolled into the loan. This allows you to keep your money in the bank and take advantage of today's current historically low interest rates.