^{Two new education courses, one on credit and another on first time home buying.}

^{"Credit When Credit Is Due" is a credit new education course. It is designed for those individuals who have had some negatives, such as a delinquent loan, a late payment or bankruptcy.
It is a twelve lesson course, home study or classroom version that guides you through the credit puzzle.  Upon completion, those who complete the final exam receive a certificate of completion and your name goes into a national data base.  You will also be entitled to discounts on loan applications, waiver of fees or a lowering of the points and with certain utilities, a waiver of deposits and much, much more.  Click here for more information about "Credit When Credit Is Due."}

^{"Make Your Move" a new course for first time homebuyers.  It is the most useful national standardized program that meets Fannie Mae and HUD standards.}

^{Each of the nine lessons is a self-contained unit and may be studied in any order in a self study or a classroom format.}

^{"Make Your Move" is the most comprehensive first time homebuyer course in America.  It discusses new construction, how to identify and avoid predatory lenders. It also provides an in-depth look at insurance and the growing problem for first time buyers of obtaining a homeowners policy at a reasonable price.}

^{Other features of "Make Your Move" include budgeting as a first-time homeowner and explains what lenders look for and why.  It is presented in an easy-to-understand, conversational style.}

Mortgages & Refinancing
Home Mortgage Loans
Second Mortgage Home Loans
Federal Home Loan Mortgage
Home Mortgage Refinancing Loans
Home Improvement Mortgage Loans

If You want to save money Refinancing Your Home...

What exactly are the options for a home loan
There are various terms used to describe home loans

No matter what you call it...

Figuring Your Home's Equity

Home equity is the difference between the fair market
value of your home and the amount that you owe on
the mortgage. It is the amount of money that you have
invested in the house. For example,

Fair market value                          $100,000
Outstanding mortgage balance      -60,000
Home Equity                                   $ 40,000

Home equity loans are not new. These
loans have been  offered by financial institutions for
years. You might know them better as second mortgages.  They became popular in the 1980's when financial institutions marketed home equity loans as a way to tap into the financial asset that homeowners had built up by paying down their mortgages. Consumers soon realized the benefits of borrowing on their homes' equity. They  could pay for college costs, home improvements, bill consolidations, cars and financing new businesses or second homes at a lower cost than with other types of consumer loans.

Home Equity Products

A home equity loan provides a lump sum payment for a specified use, such as a home improvement. You sign a contract that states the amount and terms of the  payments. You cannot borrow any further funds from this loan. Your house will be used for collateral, if you cannot make the payments.

A home equity line of credit gives you the right to  draw on your funds, up to your personal credit limit.  The financial institution will determine your actual credit line based on your income and financial obligations. You are given either special checks or a
credit card. Then you can draw on your credit line until you reach your limit. Most financial institutions have a minimum draw when using the special checks, from $100 to $500. The credit card usually does not have a minimum draw. When you reach your limit, you cannot draw any more funds until you either pay
off some of the balance or apply to increase your credit line. It is a cash reserve that can be used for any purpose. Generally with a credit line, if you borrow small sums over time or borrow and repay the balance within a reasonable time, you can expect to pay less  interest than you would with a home equity loan.

Home equity products provide a relatively low cost
credit source because they are secured by your house. You have credit that is flexible
enough to be available when and where you need it. You can use the credit as  you please, with the under- standing that your house is used as collateral. Tax laws allow the interest on home equity products to be fully deductible for most  purposes.

Almost every bank and credit union offers home equity loans or lines of credit. Financial institutions negotiate a home equity loan just like a second  mortgage. You have to pay off the loan or credit line when you sell the house. The bank will give you a lump sum amount and require that you make monthly payments for a specific period of time. The home equity loan is a possible option if you need a specific amount of money for a short period of time. An ex- ample would be a $40,000 home improvement project.

A home equity line of credit gives you more flexibility and lower closing costs than home equity loans. When  approved for a line of credit, you will receive either special checks or a credit card. You can use this  revolving credit at any time and make payments only  when there is a balance due. You will have not only a lower finance rate but a great emergency source of  funds. Your house serves as collateral
for either home equity product.

If you are considering a home equity loan or credit  line, you must understand the advantages and dis- advantages of each product. The right choice for you depends on how you answer the following  questions:

How much money do you need?
What do you need it for?
When do you need it?
When do you expect to pay it back?

Are Home Equity Products Right For You?

A home equity loan or line of credit may not be an appropriate financial tool for every homeowner.  Because home equity products are second mortgages,  they are due in full when you sell your home. These products may not be the best choice if you plan to sell your home in the near future. Some people use a home equity product to fix up a home to increase its value  before they sell it.

If your home is now worth more than when you purchased it, home equity products could help you turn that increase into usable credit. Be sure that you can afford the increase in payments and the closing costs. Your house is on the line if you default.

Copyright © 1997, National Institute for Consumer Education, Eastern Michigan University. Any person is hereby authorized to view, copy, print and distribute this mini-lesson for information and education purposes.

Home Equity Loan Facts