How to Use Your Home Equity for A Loan

Home equity is a huge asset that you can use to help you fund some projects, finance investments, or use as emergency cash with the help of a home equity loan. There no one specific way to best use a home equity loan but by understanding what it is, you’ll be better equipped to decide how to use your home equity.

Home Equity As An Asset

Oftentimes, a homeowner’s biggest asset is the value of the property he/she truly owns, otherwise known as the home equity. It can be viewed as a time deposit that the homeowner can access later in life to fund retirement or as an emergency piggy bank for when a sudden need for a lot of cash arises. It is therefore in your best interest to build your home equity while you can.

How to Build Home Equity

You can build your home equity by paying your mortgage or by improving the market value of your home. After all, home equity is computed as your home’s market value minus the amount you still owe. The pricier your property becomes and the smaller the amount you still owe, the bigger your home equity is.

Simply put, you can steadily build your home equity by going for home improvement projects that propel your home’s price appreciation up or by paying any loans you have on your house. .

Uses for Home Equity

Because home equity is an asset that is as good as cash savings, you can convert your home equity to cash that you can use to finance big expenses such as buying another property for investment with a home equity loan, funding your retirement with a reverse mortgage, and financing small expensive projects with a HELOC.

You can surely borrow against your home equity but you have to be sure that you understand the terms involved. Know that when you decide to borrow against your home equity, you’ll be risking your home to a foreclosure if you signed up for terms that are not within your means to fulfill. You have to communicate with your mortgage broker to ensure that any home loan you take is within your means to pay back or you might face losing your home.

Get a Loan Using Home Equity

Two popular ways to tap home equity is by applying for a HELOC and getting a home equity loan:

A home equity loan is given in a lump sum but will require you to keep paying a billed amount monthly. You won’t be allowed to take any new home loans on top of this until you’ve fully paid the amount you borrowed and interest is set from the start.

A HELOC is a line of credit from which you can borrow as little or as much as you need and as often as you want as long as within the set timeframe and limit. It is a great option for those who’ll have recurring big expenses. A bonus is that you only pay for interest on exact amount taken out and not the entire loan limit.

Both loans can prove to be beneficial as long as you honor their terms and make sure that you find a fair lender to borrow from. Ready to apply for a HELOC or a home equity loan? Contact us today so we can discuss what home equity financing option is best for your needs.

Finishing Your Basement – What Is The Impact on the Value of Your Home?

Finishing your basement isn’t just about increasing your living space, it is an investment in home improvement that can significantly affect you home’s value and increase your home equity when done right.

You have to make sure that you take certain precautions to ensure that your new finished basement will result to a livable space that’s not prone to leaks, water damage, and other issues. Below are some tips to remodel your basement in a way that maximizes function and gives you the most bang for buck.

Don’t Forget to Waterproof

Basements tend to be damp places even for homes that are not subject to flooding. It is not uncommon to find damp areas of moisture on the walls or get a musty odour even for basements that do not have any water leaks. This is why a complete waterproofing is the first step in remodeling or reconstructing your basement. You can DIY this but it will be much better to hire professionals to save yourself from future issues.

Design or Plan According to Your Needs

The cost of your basement remodel will vary depending on what you plan to add in it. A bedroom or new living area would be a little less pricey compared to a home theatre. You might also want to look into creating a walkout basement if your home is on grade. Another popular addition is setting an area aside for storage and utility space.

Get It Done

After coming up with the final vision for how you would want your finished basement to be, it is time to turn it into reality by researching the best team for the job. Go ahead and seek out the right plumber, carpenter, contractor, and other home remodeling professionals that you might need. Decide which projects you’ll be able to DIY and which ones are better left to professionals then get things done!

Reassess and Enjoy

Remember that finishing your basement is an investment in your home. More than enjoying its new functionality, you’ll also enjoy a substantial increase in your home’s value and therefore your home equity.

By how much?

There are a lot of factors involved in determining the increase in your home’s value after finishing your basement. What is known, though, is that a 2010 study showed that homeowners were able to recover 74% (of what they spent on average) when selling their home after finishing their basement. This is really good, considering that a finished basement will also allow you to save hundreds of dollars a year in energy savings.

Do not forget to install heating and get permits if you want your new finished basement to be officially recognized as a living space more so if you have plans to put your home on the market in the future. This is also a great selling point when the time to sell your home comes.

Investing in home improvement projects that add value to your home not only increases your home’s value but your equity as well. If you’re strapped for cash but want to pursue finishing your basement, we can help you tap your existing equity through a home equity loan. Contact us today so we can discuss with you what you’ll need for your loan application.

How Home Equity Loans Can Fund Hobbies For Seniors

A home equity loan is a type of loan taken on a home’s equity. It can be used by anyone who owns a home with substantial equity. Most people who have such equity are seniors who are in or near retirement age because they’ve been paying for that equity for quite some time.

When someone is in retirement age or have altogether retired, their income will not be as much as they were used to. This puts a halt on enjoying life’s simple pleasures such as traveling or investing in a hobby, but only if one has no access to any other source of funds.

The beauty of a home equity loan is that as a senior, you will have more reasons to look forward to retirement knowing that you’ll have something to fall back to should you have need for extra cash.

So Now You’re Retired!

Retirement gives you quite a lot of free time to do what you want such as pursue hobbies or activities that you’ve always wanted to. This is great, but hobbies and experience-enriching activities come with a price tag.

Of course some hobbies are next to being free such as watching the birds at the park, knitting, or starting a backyard garden. Learning to fly an airplane or sailing a boat aren’t. In fact, some of the most popular hobbies for seniors are a bit on the pricey side. Know more about them below!

Popular Hobbies for Seniors

Hobbies are no way frivolous. Each activity adds quality to one’s life and can improve health, both physical and mental. The most popular hobbies for seniors are as follows:

  • Boating and fishing – boating and fishing can go beyond the rent of a boat or the purchase of fishing equipment. Serious hobbyists buy their boats and that can also net a bit in terms of maintenance. This is really worth it though because you’ll end up saving in the long run.
  • Dancing – Unless you’ve been a dancer in your younger years, learning how to dance in retirement will mean taking a few lessons plus night outs with friends.
  • Hiking – Hiking would incur some traveling if you’re not anywhere near scenic spots or hiking trails. You’ll also need proper gear like shoes and gloves.
  • Hunting – just like any other hobby, hunting will need investment in both time and equipment. Guns and gear for practice and actual hunting may not be the same so you will have to purchase both and perhaps even start a small collection.
  • Traveling – By far the most popular and also the most expensive hobby for seniors, traveling will incur expenses even when you only choose to go for road trips and stay with friends. Overseas travel would mean a stay in a hotel or some form of paid accommodation.

How Does a Home Equity Loan Benefit You?

Applying and getting approved for a home equity loan will allow you to tap into your equity so you can enjoy more of your golden years without sacrificing anything, especially your quality of life. It is similar to taking a withdrawal from an investment that you’ve made throughout the years. You’ll be able to take out up to the limit a loan provider will allow. You can also stay in your home until a change of ownership occurs such as when you decide to sell or pass the property to someone else.

Excited to live the life that you deserve with the use of your home equity? Contact us and apply for a home equity loan today!

Home Equity Facts: What You Need to Know

Homeowners refer to their hone equity as wealth, but what does it have to do with building your net worth? What is home equity and how does it contribute to your wealth?

What is Home Equity?

Home equity is the value that you have built up in your home. If you still have some mortgage left to pay, it is the current market value of your home minus all the money you still owe.

Because of the above, your home equity is very much like a type of bond because it locks up your money with your property. There are ways to tap your home equity; however, note that the longer you let it sit (without real estate depreciation), the more it can create more wealth for you as your paid for percentage of your home increases.

Building home equity is a slow process unless there is a sudden increase of real estate prices in your area because of housing demand or some other factor. Note too that it can suddenly fall if home in your area lose their marketability. This is why it would be wise to be picky when it comes to choosing a property’s location.

Significance of Your Home Equity

Your home equity can be tapped once you meet the requirements set by lending institutions, companies, or private lenders. It serves as a financial resource that grows and increases value over time as  the homeowner continues to pay mortgage payments.

In a way, you can look at home equity as some sort of a forced savings account. This is because building equity on a home isn’t like spending money on material things like cars that lose value while you are still paying for it. If your property is in a good location, then you can build up quite a lot of wealth in home equity.

How to Grow Your Home Equity

Growing your wealth through home equity takes time. The longer you stay in your home and keep up to date with mortgage payments, the bigger your home equity will be (unless you live in a housing bubble). Once your mortgage has been paid for, your equity continues to grow with the property’s value.

Using Your Home Equity

You can tap your equity wealth by applying for a home equity loan. By doing so, you will be borrowing money against the value you’ve built up. You can choose to go for a home equity loan that will allow you to get money in a lump sum, or choose a HELOC or a home equity line of credit. A HELOC will let you take out as much or as little as you wish within set limits.

Note that a HELOC and a home equity loan are far from the same although they might sound similar. Both have pros and cons that should be weighed carefully depending on your needs and means.

Want to know more about how you can tap into your home equity? Contact us at Homebase Mortgages so we can assist you in home equity loan application.

4 Smart Uses of Home Equity Loans

Some people apply for a home equity loan just because they qualify for it and not for any smart purpose or reason. Sure, it is quite nice to have access to some cash that you can use to buy or pay for some things you may like now, but you have to remember that a home equity loan comes with obligations and interest that you will have to pay on top of your loan. It is therefore wise to apply for a home equity loan if you know how to use it to get the most benefits! Below are 4 smart uses for home equity loans and why.

Spend the Home Equity Loan on Home Improvement

Do you know that you can raise the value of your property by a significant percentage if you target certain home improvement projects for your home? The thing is, home improvement and minor home renovations can cost quite a bit of cash that not everyone may have. That’s where funds from a home equity loan can come in hand.

Certain additions such as remodeling the kitchen or upgrading appliances can increase the fair market price of your house. Not only that, but carefully planned and professionally executed additions can make living in your home a joy. You might even forgo selling once you’ve got your home improvement projects done!

Just some things to think about though, lenders might add additional fees if they know that you will be putting your home on the market. Also note that if your purpose is to sell, you must make enough profit to cover the cost of your first mortgage plus the home equity loan.

Use the Home Equity Loan for Debt Consolidation

Paying off a lot of loans with various due dates and interest rates can be tricky. You might fall behind on payments or end up paying a lot more because of missed payments and high interest rates plus fees. By using a home equity loan to pay off existing loans, you end up consolidating your loans into one loan that has a lower interest rate and is less of a hassle to keep track of. Smart!

Buy Something Expensive That You’ve Been Wanting for a Long Time

While a home equity loan shouldn’t be used for buying frivolous goods, it can be used to pay for a dream vacation, the car you’ve always wanted, or pay for a huge medical bill for a procedure that can save your life. Just do not go overboard and remember that the money you spend from your home equity loan should be paid back because your home is on the line.

Pay for College or Post Graduate Studies with a Home Equity Loan

Education can get very expensive but the cost shouldn’t be a hindrance if by getting higher education means getting more out of life and reaching your dreams. You can use your home equity loan to pay for your kid’s education or your own so that you can have a better and brighter future. Remember that a good education means better compensation in whatever field so this investment will surely pay for itself.

Need help applying for a home equity loan? Contact us at Homebase Mortgages so we can guide you with your loan application. We can also help you get approved for other types of loans more so if you have a bad credit history! Inquire today!

Second Mortgage Loans vs. Home Equity Loans

Most people get confused when referring to home equity loans and second mortgages because some websites may use the terms interchangeably, so how are they different?

A second mortgage is actually a type of home equity loan. When mortgage professionals bring up the term home equity loan, they are usually referring to a HELOC or a home equity line of credit. Both loans allow you to use the equity you’ve built up in your home to your advantage but subtle differences may make one better than the other for your needs.

To make it easier for you to pick whether a second mortgage or a home equity loan would be better for you, we’ll have to touch up on their basics so you can have a clearer understanding of each loan type.

A Look into HELOCs

An easy way to describe a HELOC is to compare it to a credit card. Your current equity is a determining factor in setting your credit limit but just like a credit card, you can use a HELOC for both big and small purchases as long as you do not exceed your limit. Interest is charged just like a credit card but only to the amount you’ve taken out of your equity via your HELOC. The limit of your HELOC’s credit is based on your credit worthiness and the equity value you’ve built up.

A Look Into Second Mortgages

A second mortgage allows you to tap into a set amount of money that you will have to pay according to the schedule set out by your mortgage lenders. This is not the same as refinancing because unlike it, a second mortgage does not replace your first mortgage.

A second mortgage usually last for 15 to 30 years and offer you a fixed interest. The interest will be based on your credit history so the cleaner your record is, the lower the interest rate you will have to pay. The price of your home and the current market’s interest rates are also factored in.

Note that although the above means that your second mortgage will have a higher interest than your first one, the fees that you will have to pay are generally lower.

Should You Go for a HELOC or a Second Mortgage?

The main factors that will determine whether a second mortgage or a HELOC is better for you are your financial needs and your financial capabilities. If you need a substantial lump sum of cash, then a second mortgage will be best for you. On the other hand, if you are someone who needs small amounts of money on a recurring basis, then going for a HELOC would be better for you. Beware though that if you’re the type that gets easily tempted with purchases that you do not need, then getting a HELOC may not be the best idea.

To help you decide which loan can answer your needs, it would be in your best interest to talk to professional mortgage brokers who can help you choose your loan and connect you with refutable lenders.

Ready to apply for a loan? Contact us today at Homebase Mortgages!

Home Equity Loans – What You Need to Know

Second mortgages or home equity loans are getting popular once again. It fell back a bit after the recession, but as people are making moves now to take charge of their finances once again, interest in various loan options are picking up. If you want to find out more details about home equity loans and whether you might qualify for it, you’ve come to the right place.

How to Qualify for a Home Equity Loan

The first thing you need to be eligible for a home equity loan is that you need to have equity. In layman’s terms, this is the value of the portion of the home that you already own and paid for versus the portion that is still owned by the bank. The amount of your equity in this scenario is also known as your loan-to-value ratio – the balance that you still have to pay for compared to the total value of your property.

According to the report posted by credit.com on the Home Buying section of Fox Business, lenders generally want you to have a loan-to value ratio of at least 80% after your home equity loan. In other words, you will need a minimum of 20% ownership to qualify for this type of loan.

This applies as follows: If you have a $500,000 home and you want to qualify for a $50,000 home equity line of credit or home equity loan, you will need at least 30% equity, or a loan balance of no greater than $350,000.

2 Types of Home Equity Loans

Home equity loans have 2 types, a standard home equity loan and a HELOC or a home equity line of credit. In a HELOC, you can use up your loan in smaller increments very much like how you use your credit card’s credit limit. In a standard home equity loan, you borrow a lump sum and can’t borrow more than the set limit.

Both loans have specific terms and interest rates plus limits to until which you can borrow before having to pay it back. You can choose which of the two types of loans would suit you best based on the amount of money you need now and future ability to pay back.

Getting a Home Equity Loan

Most people who need a huge amount of money to pay for home renovations opt to get the lump sum type of home equity loan. It is also the second mortgage of choice for people who want to use their equity to consolidate debts. Consolidating debts is a smart way to use your home equity loan because the payments are much more manageable and the interest rates are not as high as credit card interest (although typically higher than your mortgage’s interest).

In comparison with the above, people with a variable need for funds favour getting a HELOC because it allows them to only borrow what they currently need until a certain limit is reached.

Keep in mind that no matter what type of second mortgage you choose to go for, it should be one that you are sure you can pay off. You also have to be fully informed of the risks and fully understand the terms you are getting yourself into before signing anything. This is the service that professional mortgage brokers give you – we make sure to look out for you so your loan will help you manage your finances, not cause you problems. Need a second mortgage? Contact us at Homebase Mortgages today!

Pros and Cons, a Look into Home Equity Loans and Lines Of Credit

More and more homeowners are looking into being able to sell homes for profit, unfortunately, whatever you can gain from doing so is often left far from your reach unless you are able to access it using a HELOC or using a home equity loan.

So which one then is better?

A home equity loan and a home equity line of credit are types of second mortgages that you can gain access to if you have a certain built-up amount of equity in your home. More often than not, financial planners would advise you against using the equity you’ve built up unless you are doing so for purposes that can further increase your home equity. That is a smart way of using it after all.

A Look into Home Equity Loans

It would be easier for most people to budget around a home equity loan since it has a fixed interest and fixed payment every month. The thing to remember is that the fixed value for your home equity loan is something that you will have to pay on top of your mortgage. It is also a good source of funds for big expenses because it allows you to take out money in a lump sum.

A pro for a home equity loan include an interest rate that is tax deductible and has a fixed rate. A con would be that should the property values in your area suffer from a decline, going for a home equity loan can work against you as you might end up owing more money.

A Look into Home Equity Lines of Credit

HELOCs or Home Equity Lines Of Credit are similar to home equity loan because both are ways to tap into your home’s equity. It also differs in the sense that it operates more like a credit card with a pre-determined credit limit or credit ceiling. A good thing about this type of second mortgage is that you will only have to pay interest on the amount that you’ve withdrawn, and you can borrow as much or as little as you need as long as it does not exceed the limit.

Furthermore about interest rate is the fact that with HELOCs, the interest rates usually start small and then becomes variable or is adjusted according the movements against the benchmark. This detail means your monthly payment is also variable.

Some lenders can allow you to convert a part of your HELOC into a fixed rate while allowing a part of it to still be used like a credit card limit.

Pros about a HELOC include interest-only payments during your draw period, being allowed to pay interest on just the amount you’ve withdrawn, and the fact that interest paid is often tax deductible. Cons include increasing interest rates that will increase the amount you have to pay and possibly falling victim to your own overspending due to how flexible a HELOC is.

Ready to apply for a HELOC or a home equity line of credit? Contact us at Homebase Mortgages today!

Best Home Renovations to Increase Your Property Value

Let’s be honest with ourselves, the most compelling reason why homeowners choose to go forth with having a home renovation is not for aesthetic reasons but for increasing the home’s value. In today’s blog post, we are sharing with you some of the best home renovations that can drum up a return of investment that is up to 5X the cost of the renovation undertaken. Bring out your pen and be sure to take notes!

Flooring Upgrade

The floors are the biggest area of your home that gets the least attention when it comes to maintenance and repair but do you know that by just installing hardwood floors, your home’s value can soar up a significant percentage? Another good news is that if you have existing hardwood floors but they have seen better days, refinishing them can even net you more return of investment as older hardwood floors have a charm of their own!

Bathroom Makeover

The bathroom is typically the room in the house that dates it or shows the most wear and tear. If you can give an existing bathroom a makeover or manage to add even just a half bath to your property, your home’s market value will rise dramatically. A dead space in your home such as under the stairs can be converted to a powder room, an extra shower room, or a full bath. You can make the area seem more spacious by using glass for the shower.

Kitchen Touch-Up

A desirable modern kitchen can make buyers put in an offer right then and there, so why not invest in a kitchen renovation? You can start with the cabinets and lighting, perhaps even replace the backsplash if it looks too old. There are plenty of affordable kitchen solutions for countertops and cabinetry that won’t sacrifice on function and construction. You just have to look around!

Replace Fixtures

Okay, perhaps you don’t have that big of a budget to go on full room makeovers, but that doesn’t mean there is nothing you can do. By simply replacing fixtures such as cabinet hardware, doorknobs, faucets, light fixtures, and countertops, you can modernise your home with just a few hundred or few thousand dollars worth of cash. How’s that for a truly smart home renovation trick?

Plan for an Income Suite or a Basement Apartment

There are so many reasons why building an income suite or a basement apartment will increase the value of your home. One is that home buyers will see it as a bargain because they will be getting two properties for the price of one. Another is that an income suite will surely appeal to families that are looking for a home that offers them the opportunity to have a grandparent’s suite or an apartment for a child who wants to be independent but can’t buy a home yet. Let us also not forget that an income suite will help prospective home buyers pay off for the mortgage should they decide to rent it out.

Loving all the ideas for home renovation in here but don’t have enough funds to go forth with these ideas? Why not apply for a second mortgage as a smart way to afford a home renovation? You can use the funds from a second mortgage to make your home renovation dreams a reality. Contact us for details.

Smart Ways to Afford a Home Renovation

There is no such thing as cheap home repair or home renovation. Even if you’re the absolute best when it comes to seeking bargain deals, the cost is bound to be more than what most people can freely spend. There will be materials, labour, plus some other extra costs that are bound to be a part of having your home in tip top shape.

There is no denying it. A major home project like a renovation is worth a substantial amount of your yearly income; won’t you want to know ways on how can you fund it without letting go of the other things that you enjoy? Lucky for you, you’re at the right page!

Start a Savings Fund

This would be the most obvious in this list but we all know that a huge percentage of people dip into their savings fund and end with very little savings at all. For this to work, you have to set up a dedicated savings fund that is solely for home renovation projects. If you’ve got a little bit extra left from your weekly or monthly budget, this might be the easiest option to fo fund your home renovation.

Get a Personal Loan

A personal loan is an unsecured loan. This means that you won’t need to have any collateral for the money you borrow. Because the lender will be left with nothing if you fail to pay, the qualifications for this loan is often very strict. A personal loan also comes with a high-interest rate and a relatively lesser maximum amount compared to other options for financing.

It should be noted that a higher interest rate means that the overall cost of your home improvement projects will be increased by the same interest rate so choosing this option isn’t that attractive unless you can reap tremendous benefits from the home improvement. Be sure that the terms set by your lender will be compatible with your financial means.

Opt for Home Equity Loans and Lines of Credit

If you’ve already built up quite some equity on your home, a HELOC or a home equity loan would be a great way to use that to your advantage.

Home equity loans lets you borrow a specified lump amount from your equity. There will be terms of repayment that you will have to agree to, then you’ll be lent some money, and then you repay the borrowed amount according to the terms of the loan including the interest.

As for a HELOC, it’s like a credit card in the sense that it has a revolving line of credit. You can reuse or withdraw from the determined amount as long as you pay before the credit expires. If you need money now and is sure that you have some more incoming in the future, this might be worth looking into.

Just note that both home equity loan and HELOC must be fully paid back with the interest. The amount you pay will usually be set per month so you need to ensure that your cash flow will allow for this. Failing to pay on time can result in the lender foreclosing your home.

Interested in getting a HELOC or a home equity loan? Contact us so we can answer your questions and help you be on your way to a home renovation that you can afford.