Home Owner Equity Loan - Your Property As Collateral
By Ernesto Maitim

There is equity attached to a property, hence home owner equity loan is the type that uses the home as form of security for offered loans. The lending company will try to convince the home buyer or owner to put up his property as main collateral when trying to obtain an equity home loan. Therefore, if you consider obtaining a loan in order to pay up the bills or for any other reasons such as consolidating debts or paying off credit card interests, you have to realize there are risks that you need to consider.

Few lending companies found on the internet claim to have equity loan schemes without any upfront fees. However, these companies do not actually give full information on the stipulations, exclusions and restrictions when offering such loans. Therefore, it is advisable for borrowers
to read the small prints on the contract when considering a loan.

To site an example, a lending company may give you an offer of thirty year fixed rate equity loan and will say that you will earn one point if you apply for a specified amount. In other words you will get a few thousand off closing costs if you use the point. Likewise, if you obtain zero-point home loan, you may utilize points in order to refinance mortgage and receive lower rates. Therefore, zero-point and zero-fee loans are those that have higher rates and bigger repayments of mortgage.

Some home owner equity loan programs have penalties and dues, evidently only a few number of these zero-point and zero-fee loans do not. This makes them worth paying their higher costs as well as interest rates, since points can be used to reduce the rates over time without even being penalized.