Open the Cash Vault Inside Your Home

Believe it or not, many people do not understand equity and the power it provides.

In its purest form, equity is money. With regard to real estate (specifically, your house or other investment property), equity is measured in terms of the value of the property minus what you owe. So, if your home is valued at $100,000, and you owe $40,000 on it, you have $60,000 in equity (actual money that is available to you, under particular circumstances).

Surprisingly, many people have this type of equity and do not take advantage of it. Some people are actually in dire financial straits and fail to realize their problems can be solved very easily, by taking the equity from their home. Remember, your home is a "vault," and the money inside that vault belongs to you. Best of all, you can use that money/ equity for anything you desire, from home improvement to travel expenses to spending money.

Exactly what is a home equity line of credit or HELOC? A home equity line of credit, which lenders and mortgage brokers refer to as a HELOC, is a different kind of home loan. An equity line has different rates and terms from a conventional first mortgage. In a standard home loan, or mortgage, your monthly payments cover both the principal loan and the interest you are charged.

Most mortgage payments include escrow, or taxes and insurance. An equity line of credit payment does not reduce your principal loan amount and does not include escrow. You are borrowing the equity in your house and paying the bank an interest premium on that loan. With a HELOC, you pay only the interest on the loan and, generally, you get the money for less time than you do a standard first mortgage.

The underwriting on these loans is very simple, and in most cases, the loans are very easy to get. At close, you either get one big check, which you can deposit into your savings or checking account or you can get a check book and treat your equity line of credit as another checking account. The payment on equity lines is very enticing. Paying interest only makes for a very low payment. It's important to remember, though, when paying interest only, you are not paying down the principal loan balance.

The Power of Interest-Only Payments So, let's suppose you take an equity line for $50,000 at 4.25% interest. This interest rate is based on the Prime rate, a floating rate that can change but does not fluctuate very often. When this article was first published, the prime rate was 4.25 percent. So, on your $50,000 equity line of credit, your payment is $177.00 each month. This is an incredibly low payment on a loan of this size. This gives you a great deal of power, because you can control a large sum of money for an extremely low monthly payment. It is this low, because you are only paying the interest on the loan.

At the end of the first year, you will have paid the bank over $2,100. You will, however, still owe $50,000. This is because your monthly payment is an interest-only payment. This is where some people can get in trouble with home equity lines of credit. If you use all the equity in your home and never pay down the balance, then decide to sell your house, you won't make anything on the sale, because you'll owe it all to the bank.

It is also important to understand the terms on a home equity line of credit (HELOC). When talking to mortgage professionals about home equity lines of credit, be sure you understand the terms, as lenders vary on what they'll offer. Like conventional mortgages, which have terms of 30 years, 15 years, 10 years, etc., home equity lines also have various terms, but not all lenders offer them. Don't let this confuse you. Just find your trustworthy mortgage broker, and tell him or her exactly what you want.

Unlike mortgage payments, which include complicated yearly amortization of the principal loan amount, interest-only payments are calculated very easily. You can do it in two simple steps. To find out your payment, first learn what rate of interest you'll be charged. If you are using 80 percent or less of the equity available and you have an A credit rating, you'll be able to get the best rate available, which is the prime rate.

Now, let's assume you have $40,000 in equity in your house, but you only need $20,000 (taking less than 100% of the equity is important). You take $20,000 and multiply it by 4.25%, which gives you 850. This is what you'll pay each year to borrow $20,000. Next, divide the 850 by 12 for a monthly, interest-only payment. Your payment for your $20,000 home equity line of credit is $70.83.

This is a very powerful loan. Imagine paying less than 71 dollars for the ability to control $20,000. Some people pay more for cable TV or their monthly cell phone bill. Some people even take the equity in their home and invest it elsewhere. You're probably figuring out how much equity you have right now, and what you can do with that money!

To learn how you can turn your equity into a never-ending money cycle that will fill your bank account year after year, read Winning the Mortgage Game. Whatever you decide, open the cash vault inside your home, and make use of your equity today.

Mark Barnes is author of the wealth-building system, Winning the Mortgage Game and other investment real estate books. He is also a suspense novelist, and his new novel, The League, will thrill both suspense and sports fans. Learn about Mark's wealth-building system and get his free home loan course at http://www.winningthemortgagegame.com. Learn more about The League and read an excerpt at http://www.sportsnovels.com

---

Online Debt Consolidation ? Devising Newer Ways for Changing Consumer Trends

Consumers today are getting wiser by the day. They are educated and enlightened. They know what they want. A change in their needs and demands has led... Read More

16.4% APR $5,000 Auto Loan...HELP!

Are you the victim of a high interest rate auto loan? If so, the following email discussion may help you. Read on:DEAR LoanResources.Net:I was very impressed with... Read More

Get Out of Debt

It is said that a pet tiger cub can become dangerous if it tastes blood. It will stop at killing no one, not even the people who... Read More

Alternatives to Filing Bankruptcy

Deciding to file for bankruptcy is a decision that should not be taken lightly. Too many people opt for this decision before finding out what other alternatives... Read More

Debt Consolidation Primer ? Four Things You Can Do to Get Out of Debt

Problem debt is rampant throughout America. In addition to mortgages and auto loans, the average household in the U.S. has nearly $10,000 in credit card debt. As... Read More

Getting a Better Consolidation Loan Secured

If you're looking for the best way to reduce the number of payments you have to make each month, you might want to consider a consolidation loan... Read More

Vultures and Victims

Has anyone noticed how many loan companies now fill up the commercial breaks? Sofa, after of sofa of happy couples are shown, with carefully manipulated stereotypes discussing... Read More

Getting Your Best Deal on a Consolidation Loan

If you find yourself having to make too many payments a month, you might consider getting a consolidation loan.Used for a variety of purposes, a consolidation loan... Read More

Bad Credit Debt Consolidation Loans - Getting a Debt Consolidation Loan, Even With Poor Credit

An online debt consolidation loan allows even people with a poor credit to reduce their overall monthly payments and regain their financial footing. While there are personal... Read More

Perks and Pitfalls of Debt Consolidation

Whether you want to pursue debt consolidation in order to make a good financial situation better or to pull yourself back from the brink of bankruptcy you... Read More

Debt Consolidation Solutions

Millions of Americans are finding it hard to pay their bills and dig themselves out of debt. Many are turning to debt consolidation for help. While the... Read More

Debt Consolidation ? Discipline is Required if Consolidating with Home Equity

Debt consolidation is a popular topic these days. The average American carries nearly $10,000 in credit card debt and credit card debt of $100,000 is not all... Read More

Debt Consolidation ? Consolidate Your Student Loans Now!

The Federal student loan program has benefited thousands of college students in the forty years since it was introduced. Interest rates for the program have historically been... Read More

Debt Reduction Solutions

Finding solutions to reducing your debt takes some thinking and research on your part. You have some good choices available to you and we shall list these... Read More

What Is A Debt Consolidation Program?

Debt consolidation programs are devised to get you out of debt in the quickest and most inexpensive manner possible. When you sign up with a debt consolidation... Read More

What Your Mama Never Told You About Debt Consolidation Services

When someone is extremely deep in debt, and he or she has no other options to prevent bankruptcy, debt consolidation can be his or her savior. Debt... Read More

Debt Consolidation for Homeowners: Saving Grace for Inept Borrowers

You cannot understand the importance of being a homeowner until you enter the loan market for debt consolidation. Debt consolidation for homeowners is a responsible way of... Read More

Credit Counseling ? Get in Line Now to Avoid the Upcoming Rush

Credit counseling is a valuable service for consumers who have trouble managing their finances. A distinctly different service from debt consolidation, credit counseling assists consumers with problem... Read More

Debt Consolidation ? How to Protect Your Credit Accounts from Theft

Last week, a security exploit at CardSystems Solutions, Inc, a credit card processor, may have allowed thieves to obtain as many as 40 million credit card numbers... Read More

Thinking Beyond Debt Consolidation Loans

Planning to devise a permanent solution to the problems of debt? The chances of success, to be exact, are lesser, given the features which characterize the debts.... Read More

Getting the Most Out of Consolidation Loans UK

Before letting too much debt or too many payments get the better of you, consider applying for consolidation loans UK.If you're wondering what they are, consolidation loans... Read More

Considering Debt Settlement? What You Should Know

Your credit card bills are stacking up and for whatever reason you don't have the means to pay the debt. You definitely have choices when you are... Read More

Credit Cards Debt Consolidation

Consolidating credit card debt is never easy. Too often people run up their debts without even realizing it until it is too late. If you are one... Read More

No-Cost Student Loan Consolidation

No-Cost Student Loan ConsolidationA no-cost student loan consolidation ? doesn't that just sound too good to be true? Think about it. You have just accrued thousands of... Read More

Debt Consolidation Loans: Thousands Now Out Of Debt, Who Never Thought They Would Be!

A Debt consolidation loan: Is a personal loan you use to pay all your debts. You may odtain it from a finance company, bank, credit union, debt... Read More

Tracking Down Cheap Debt Consolidation Loans

In the modern world of expensive living and high interest rates, it might seem nearly impossible to find cheap debt consolidation loans. If you're one of the... Read More