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Option One Mortgage
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Who Should Take Out a Mortgage?
The Monthly Payment
What is a Second Mortgage?
Take Out a Second Mortgage?
Home Equity Line of Credit
Preparing to Apply
The Down Payment
Fixed vs. Variable Rates
Escrow
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Home Equity Line of Credit (HELOC)

Consumers who are faced with unexpected expenses are often confused about just how much they need to borrow. That is where a home equity line of credit comes into the picture.

Option One Mortgage wants homeowners to know that they are not limited to a traditional approach when it comes to a second mortgage. Instead of borrowing a lump sum to be disbursed upon closing, a home equity line of credit lets consumers draw on a pre-determined amount of cash that has already been approved by the lending institution.

Let’s say a homeowner is doing renovations on their roof. The project will probably cost around $5,000, barring any unforeseen expenses. The homeowner does not want to borrow more than they need, nor do they want to be caught without a cushion should be project go over budget. The flexibility of a home equity line of credit can be the perfect solution.

Option One Mortgage reminds consumers to carefully review the terms and conditions of any home equity line of credit second mortgage loan they are considering. Depending on the situation, there can be a minimum withdrawal amount, and you also need to understand what the expectations are as far as monthly payments.

While home equity lines of credit do not always require you to pay down the principal every month, you need to have a plan in place as to how you will pay the funds back when the loan comes due.

Planning on making a balloon payment at the end of the loan term is not realistic unless you know for sure from where the funds will come. Some simple words of advice, never borrow money unless you are certain that you will be able to pay it back.

 

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