Archive for July, 2009

Do you know what a 125 home equity loan is? I’m sure you know all about traditional home
equity loans where you can borrow money using the equity in your home as collateral for
the loan. These secured loans provide many people with cash for a wide range of uses. Of
course there are other types of equity loans besides the traditional equity loan, and the
125 home equity loan is one of these options. This type of loan lets you get even more
cash than usual based on the available equity in your home.

Let me first define what equity is. Your home’s equity is quite simply the difference in
what you owe the bank still and the value of your home. For example, if your home is
valued at $300,000 and you still owe $150,000 to the mortgage company then you have
$150,000 in equity. One nice benefit is that in a rising real estate market you gain
additional equity simply through the rise in your homes value.

Traditional Home Equity Loans vs. 125 Home Equity Loans In a traditional home equity loan
you are offered a loan that does not exceed the amount of equity present in your home. So,
if you have $25,000 in equity you’re able to get a loan for $25,000. This loan can be used
to pay for anything you want from home improvements to education or even a vacation if you
choose.

The difference between the traditional secured loan and a 125 home loan is in the amount
you can borrow. With a 125 loan you can borrow up to 125% of the present value in your
home. In this case if you have $25,000 in your home you would be offered a loan of
$31,250. In the past many lenders would shy away from this type of loan since part of it
is unsecured and increases their risk. These days however more and more lenders,
especially online lenders are offering this kind of partially unsecured loan. If you’re
thinking of applying for this type of loan you should know that a high credit score will
help you greatly in getting approved.

125 Home Equity Loan Warning The 125 secured loan is especially suited for those who need
access to a large amount of money. If you are thinking of using the money to start a
business or take on a large home improvement project a 125 loan could meet your needs
quite well.

Keep in mind that as long as home values continue to rise or at least stay stagnant you’re
in little danger from this type of loan. However, if your home value declines your equity
will decline as well and you could actually end up owing more than your home is worth.

It really depends on your needs and circumstances to determine how much sense a 125 home
equity loan makes for you. As I said previously, it can be very useful for those starting
a business, particularly if you expect the business to have good cash flow. It is also
useful for large home improvements since they are likely to increase your home’s value and
also your equity. Just be careful that you don’t overextend yourself when taking any type
of home equity loan.

Learn more about 125 home equity loan and refinancing your home mortgage by visiting the
authors website.

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