The 125% Home Equity Loan
Are you less than convinced by all those amazing debt consolidation stories out there - the ones where someone seems to magically eliminate all of their debt in just a few months? They usually sound a little too good to be true, and that's because they usually are. However, there is another, more reliable way to consolidate your debt through the help of 125% home equity loan. Created in the mid 1990's, the 125% home equity loan was the first mortgage that allowed home owners to borrow more than 100% of their home's equity. The 125% home equity loan has become an option for debt consolidation because it can significantly reduce your monthly payments and free up extra cash. Read on to find out exactly what you need to know about 125% home equity loans.
What You Need to Know About the 125% Home Equity Loan?
- With a 125% home equity loan, you'll be able to borrow more than what you're home is actually worth, as opposed to just simply refinancing. This is regardless of how much equity you have in your home.
- It's important to try and get a fixed interest rate or secure interest rate, as it will play a major factor in whether or not you actually get a lower monthly payments. It's estimated that paying off a fixed rate interest loan over paying off credit card debt can save you three times as much over time.
- If you've had a foreclosure in the past or have a damaged credit score, you may find getting a fixed interest rate very difficult. However, you can still save a significant amount of money with an adjustable rate loan. You may have to search for a lender that can help you, but it could be well worth your time.
- As with any major financial decision, you should discuss your plans with a financial advisor before even thinking about getting a 125% home equity loan. Every type of loan has its strengths and weaknesses; you just want to make sure it's the best fit for your financial situation.
