home equity loan

Hi Krik

When there is some equity in your relative's home, considering home equity loan can be a good solution. A home equity loan is that type of loan when money is borrowed against the equity in the home. The equity is based on the difference between the fair market value of the property and the amount of money that is owed on any mortgage.

At this point, it is better to consult the Internal Revenue Service (IRS) or a tax advisor if the interest that is paid on the home equity loan is tax deductible or not.

When your relative is going to shop for any loan, make sure that he is cautious enough as it is attached to his property. If in any case, he fails to repay the loan, it will result in losing his home. Please inform him that when he is borrowing money from any lending agency, it is advised to take that much amount only what is required to pay off the debt. Also, he should be well aware of the terms and conditions before entering into any sort of agreement. It will be wise to do a comparison between three lenders at least.

I have heard that many people have successfully used home equity loans for debt consolidation. The lenders are rest assured for extending this credit because they have the consumers' property attached to it. The lenders can advance 100% or even more of your equity. Do not accept more than 80% of the advance otherwise your relative might owe a lot of money when he will sell his house in the future if the real estate in his area loses its value.

As this loan is attaching a property in it, I will suggest you to look into the consolidation programs offered to clear the unsecured debts. These types of programs do not require any property to be attached and the debt is paid in easy installments and at lower rate of interest. The debt consolidation program also reduces or eliminates all the financial charges, late fees accrued on the total amount of the debt.

http://www.debtconsolidationcare.com/benefits.html

I think that the debt consolidation program will be much safer in comparison to the home equity loan for clearing the past debts. Moreover, while taking the loan, you will have to pay the interest twice unlike the debt consolidation program which has one time low rate of interest.

Please let me know what your relative thinks about it. I will be glad to hear his response.

Regards
Roxette