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Home equity loans are simple yet are sometimes treated as complicated. It’s a type of loan that allows a person to borrow against the value of their home, and to take advantage of equity they’ve built up.

Most industry experts express that homeowners should take more advantage of home equity loans, believing it to be a viable treatment of their best asset.

Here’s some basics that are important for everyone to know.

Low Rates, Relatively Easy Approval and Potential Tax Benefits

Typically, with home equity loans you can receive a fair interest rate, especially when compared to other loans. While not guaranteed, most homeowners can get approved even if they have bad credit, because your home is strong collateral.

As well, interest on a home equity loan can potentially be tax deductible, but not in every case. This is one question you will want to ask your accountant.

Large Amounts for Borrowers and Secured Loans for Lenders

Home equity can help you access a large sum of money if you need to overcome financial difficulties. It can also help you pursue a business opportunity or to fund an education or deal with a medical emergency. These things cost money, sometimes more than you have liquid in savings.

These loans are secured loans because banks feel comfortable extending you a loan based on the equity in your home.

You can borrow with a Home Equity Loan in Two Ways

Borrowers have two options when they are approved for a home equity loan. They can receive a lump sum or it can be dispensed as a line of credit. With a line of credit the money will be made available and you only repay what you use.

The way you borrow effects the repayment plan and accrued interest.

Be Wise in how you Borrow when your Home is Involved

As with anything, there are some pitfalls with home equity loans. Since your home is involved you don’t want to borrow against it to travel or repay a credit card. It is best used in specific situations and can be incredibly beneficial in those circumstances.

Timing is a tricky thing. When it comes to finances, it’s sometimes hard to know whether one should be proactive or reactive. There’s even a tendency to put things off until things have hit rock bottom or until every star has aligned.

This isn’t to say there’s a right way or a wrong way when it comes to taking on a loan or accumulating debt. These are big decisions and there’s quite a few variables to wade through.

Let’s look at some factors that should be considered when deciding if now is the right time to apply for a home equity loan.

Why do I need the Loan?

This might be the biggest question. You never want to take a loan or put your house up as collateral unless the reason is a good one. There are a ton of good reasons—medical emergency, business opportunity, home renovations.

If the reason feels legitimate then the timing is probably legitimate as well.

Will I get the Best Interest Rate and Repayment Plan?

It’s a simple question: will you get the best deal when you apply? If you believe that there’s a better interest rate around the corner or that you can improve your credit score, then the best advice might be too wait.

Timing isn’t just about what’s happening in your life. It’s also about what’s happening with the lender and if you can secure the best deal.

What if my Situation Changes?

If you need the money today but believe that your situation can change, then it still might make sense to borrow money against your home. In this case, the solution might be a home equity line of credit where the funds will be available to you. Like any line of credit, you only must pay back what you use so if your situation changes then no harm done.

Applying for loans is a big deal and the timing must be right. Be honest with your situation and logical and, most importantly, speak with a professional who can help guide you to the right decision.

If you have been reading this blog for some time, you have probably learned that there are some serious benefits to a home equity loan. Surprisingly, it’s still an avenue that many people have left untraveled. It might be the most proven yet underused way for homeowners to access money in times of need.

When you want a loan, most people have several options. Lines of credit, credit cards and even borrowing from someone they know. Each has benefits and drawbacks but none have the specific benefits of a home equity loan or line of credit.

A Home Equity Loan is like Enjoying the Perks of your Investment

For most, their home is their greatest asset. To be able to leverage your investment to access a loan is to leverage your own personal equity. The process comes with a greatest level of ease. For years, you pay your mortgage every month, so why not have it work for you when you need it? This is one of the benefits to purchasing instead of renting.

Since these are secured loans, approval is easier and you will be more trusted in the eyes of the lender.

A Home Equity Loan Allows you to Potentially Borrow More

The way a home equity loan works is you get to borrow against whatever you have invested into your home. If the value of your home is $500,000 and you’ve paid $200,000 of your mortgage, then you can borrow $200,000.

Not many loans give you access to that kind of money. Your home equity affords you greater borrowing ability.

You’ll Probably Enjoy a Lower Interest Rate

Home equity loans generally yield a lower interest rate, which means you can enjoy more of the money while you pay more towards the principle. With interest rates being the biggest detriment to borrowing, this is obviously a huge boon and should be a deciding factor.

There’s lots of options and each situation is different. Consider a home equity loan and see if it’s the best option for your life.

You’re a homeowner. It’s your name on the title and your one goal is to maximize the profit on the sale of your home. Here’s what whoever is representing your home must do:

• Price your house accurately
• Qualify buyers
• Advertise the listing
• Understand mortgages, regulations and contractual law
• Coordinate all the details of a closing

With this established, let’s look at the pros and cons of selling your home without an agent.

Pro: You Save on Several Fees which can Equate to Thousands of Dollars

Unless you have something against real estate agents, the main reason to avoid working with one is to save money. Since it’s not a small amount of money, it’s understandable if this is attractive. There’s always a risk of losing money in other areas due to inexperience but you will save substantially on agent fees.

Con: To do it Right you must Treat it as a Full-time job

Selling a home involves a lot of work. From research to staging to open houses to negotiating the deal, selling a home isn’t as simple as putting a “for sale” sign on your lawn. You should enter the process knowing that it is more than a hobby and requires daily commitment.

Pro: Complete Control

This one is no surprise. Some people want the control and are comfortable being responsible for every aspect of a sale. You will position every piece of furniture in your home, you will write every word of a listing and you will negotiate every term of the contract.

If this appeals to you, then you might fare well without an agent.

Con: You are Assuming Legal and Financial Risks

This is a big one. There are tons of legal and financial risks associated with real estate. One wrong step could cost thousands or have severe legal ramifications. It’s vital to weigh out the cost savings vs. the financial risk involved along with the potential cost of common legal issues.

Selling your own home is risky but that’s not to say that you can’t or shouldn’t do it. It comes down to comfort, personality and situation. Just know that if you go this route, it will take up a ton of time, could cost more in the end and there’s the potential for fall out.