Last updated 1 day 19 hours ago
Homeowners who need extra funds many find that applying for a home equity line of credit (HELOC) is a good way to provide financial stability.
Pros:
- Pay unexpected expenses. If your car needs significant repairs or you need to replace your roof, you may not have the money for it in your budget. A HELOC can provide the extra funds you need without forcing you into credit card debt or requiring you to access retirement funds.
- Access extra funds when you need them. Unlike home equity loans, which provide one lump sum of cash, lines of credit allow you to withdraw smaller amounts of money as you need them.
- Repay over time. You can repay your HELOC over a long period of time. You may be able to make interest-only payments, if you are short on funds.
- Pay less interest. Because a home equity line uses your home as collateral, it offers a low interest rate, making it cheaper than many other forms of debt.
Cons:
- Your home becomes collateral. A home equity line of credit uses your home as security, and this means that, if you are unable to make payments on the loan, the bank may initiate foreclosure proceedings.
- No fixed interest rate. Many home equity lines of credit have interest rates that fluctuate with the Federal Reserve’s prime rate. While this rate may still be less than many other loans, there are no guarantees.
- You may owe more than the home is worth. When you owe both your mortgage and the value of the HELOC, you may find that this debt is actually more than your home is worth, leaving you unable to sell it without owing the bank.
To learn if a HELOC is right for you, call (647) 931-9559 to speak to a representative at Pioneer West Acceptance Corp. We help homeowners in the Vancouver area obtain financial stability through home equity loans and lines of credit.
Last updated 7 days ago
If you own a home, you may be able to borrow against your equity to pay for large purchases or other expenses. But how do you choose between a home equity loan and a home equity line of credit?
In this video, you’ll learn about the difference between these two ways of borrowing against your equity and how to decide which one is right for you. Each one comes with its own benefits and risks that you’ll need to consider before making your decision.
For more help deciding between a home equity loan and a home equity line of credit, talk to Pioneer West Acceptance Corp. in Vancouver today. We can help you evaluate your needs and your financial situation to make the correct choice. Dial (647) 931-9559 to schedule an appointment.
Last updated 13 days ago
Your home is one of your most valuable assets, and, if you need money, you may want to consider a home equity loan. To learn more about these loans, check out the rest of this article.
What is a home equity loan?
A home equity loan borrows against the equity in your home—the amount of your mortage that you have already paid. If your mortgage is $200,000 and you owe $150,000, you have $50,000 equity. A bank will loan you a certain amount of the equity in your home depending on other loan factors.
Why get a home equity loan?
If you have a large, one-time expense, a home equity loan might be a way to get the funds you need. Examples include paying off credit cards, paying for a wedding, or purchasing a car. You’ll receive a large amount of money at one time, which you can repay over a long period. A home equity loan has a much lower interest rate than a credit card or other personal loan.
How does a home equity loan differ from a home equity line of credit?
Unlike a home equity line of credit, which allows you to withdraw smaller amounts of money over a longer term, a home equity loan gives you a one-time payment. A home equity loan has a fixed interest rate, reassuring the borrower that the payment will stay the same for the entirety of the loan term.
What are the downsides of a home equity loan?
Borrowing on your home’s equity may leave you owing more than your home is worth. Additionally, having access to such a large amount of money may tempt you to make unnecessary purchases, leading to more debt. However, if you are financially responsible and borrow an appropriate amount, a home equity loan might be a great way to improve your financial situation.
For more information about home equity loans, call Pioneer West Acceptance Corp. in Vancouver. We can help you decide if a home equity loan is the right choice for your financial situation. To schedule an appointment, call (647) 931-9559.
Last updated 21 days ago
When most people think of the home-buying process, they imagine several excruciating weeks spent in closing. While this long wait is essential for ensuring that no one gets taken advantage of, there are ways it can be expedited. Here’s a brief guide to the quick turnaround time for mortgage applications offered by Pioneer West Acceptance Corp. and how it can help you during the home-buying process:
By the time you get to the loan application stage of buying a home, you’ve invested a good amount of time and money: You’ve already hired real estate professionals, gone over your finances, made an offer, and had that offer accepted. After getting so far, you don’t want to be held up in the loan application process. Luckily, a mortgage company that offers quick turnaround for mortgage applications can cut down the suspense and let you continue the process in a timely manner.
The home-buying process takes long enough without having to wait for a loan application to be processed. Knowing sometimes within a 24-hour period whether or not your loan application has been accepted can give you more time to make the proper adjustments to your next application or negotiate with your would-be lender.
- Allows You to Move In Faster
Once you find the house that you want to buy, you can’t wait to move in. Unfortunately, you have to jump through a lot of hoops, including making an offer, having that offer accepted, and figuring out how you’re going to finance your new house. Luckily, having your loan application reviewed and accepted within a very short time can make one of the hoops a little easier to jump through, so you can start moving your belongings into your home that much quicker.
When you turn in a loan application, you don’t want to be dragged along for days—you want to know right away. For a quick turnaround on your mortgage application, call Pioneer West Acceptance Corp. at (647) 931-9559. Our real estate specialists will do everything possible to make sure that the home-buying process is as easy as it can be.
Last updated 1 month ago
If you have a fixed-rate mortgage and mortgage rates are falling, it only makes sense to consider trying to refinance at a lower rate. But as with most things in finance, it isn’t always a simple answer. Refinancing can certainly make sense, but it also costs money to refinance a mortgage. Depending on your specific situation, a refinance may actually end up costing you more money instead of saving money.
Adjustable Rate Mortgages
If you have an adjustable rate mortgage and your rate has reset to a higher rate than the initial low rate, it is definitely worth looking into a refinance. The good news is that adjustable rate mortgages can change their interest rates over the term of the loan, and when rates are going down, that can be good. But the real problem is that even so, you’re still likely to find that you’re paying more than you would be with a fixed-rate mortgage.
Fixed-Rate Mortgages
The old standard when it comes to home loans, a fixed-rate mortgage can be one of the best ways to finance the purchase of a home. This is because the interest rate doesn’t change over time, which means your payment remains the same. This payment stability is great, but there are times when it can be a drawback.
If mortgage rates fall in the future, you may find yourself paying more interest than what you could get on a current mortgage. This could mean throwing money away towards interest that you could possibly avoid. But the reverse is also true. If you lock in a fixed-rate that’s at a relatively low point, if rates go up in the future, you’re realizing significant savings over others who may be getting current loans at the higher rates.
Consider Costs & Amount of Equity
When considering whether or not to refinance your mortgage, you want to realistically look at how long you plan on being in the home. Since there are closing costs that may amount to thousands of dollars, you have a look at how long it would take to break even if you were to refinance.
For instance, let’s say a 1% lower interest rate would decrease your monthly mortgage payment by $100. That’s nothing to sneeze at, but let’s also assume your closing costs on the refinance total $3,000. That means you’d need to stay in the house for 30 months just to break even on the refinance. If your plans were to possibly move in three years or less, you can see where a refinance may actually cost you.
Amount of Equity
Another thing to consider is how much equity you have in the home. Most banks will require 20% equity in order to refinance your mortgage. It may still be possible to refinance without that much equity, but you'll likely get the best deal if you have at least 20% equity.
In addition, if you’ve been living in the house for a while and have built up a decent amount of equity, you can possibly save even more money since you may be able to refinance an amount lower than the original loan amount. This can reduce your monthly payments since you're now paying back a smaller loan.
Don’t Forget About New Terms
One thing many people forget is that refinancing will also extend the term of the loan again. If you’ve been making payments on your 30-year fixed mortgage for the past 10 years, you only had 20 to go. But if you refinance, if you choose another 30-year mortgage, you’re back to the beginning. But what some people do is actually refinance from a 30-year to a 15-year if they already have a number of years of payments under their belts.
Final Considerations
As you can see, there are a number of things to consider before rushing to the bank. Yes, lower mortgage rates are good, and they can save you money, but it isn’t quite that easy. You need to make sure you’ll actually live in the house long enough to benefit, and determine if possibly changing the loan terms is worth it. Not only that, but your credit history is even more important than ever. If your credit isn’t perfect or you have some negative marks on your report, you may find that you can’t even take advantage of the best rates.
So, if lower rates have you interested in a refinance, it’s worth taking a look at. Just make sure that you’re not being drawn in by the rate alone and that you’re really going to reap the rewards of a refinance.
To determine where you stand, visit the Pioneer West Acceptance Corp. website to try their online mortgage refinancing calculator. Feel free to contact us to learn more about refinancing and managing your mortgage. We can be reached at (604) 987-1420.
