Doug Hersom

Borrowing Against Your Home has Its Benefits

With fuel, food and home prices fluctuating, families are finding that a home equity loan can provide much needed financial relief to unexpected debt and large family expenses. Because an individual's home is, most likely, their largest asset, homeowners are using the equity in their home to fund a variety of items like medical bills, education and even their escalating living expenses. Take a closer look at the basics and the benefits of tackling current and anticipated debt by borrowing against your home.

Before you begin the home equity loan application process with Lakewood Capital Inc., it is imperative to know the two types of home equity loans: fixed rate and lines of credit. Both loan types are offered with loan terms that generally range anywhere from 5 to 15 years and require the borrower to repay the loan in full if the home against which they are borrowed is sold.

Though there are borrowing and term similarities, each loan has its differences. A home equity loan (also known as a second mortgage) is a fixed amount that you borrow to be paid off over a certain number of months, while the home equity line of credit (HELOC) is a variable rate. Much like a credit card, a HELOC pre-approves you, the borrower, for a certain spending limit of which you may withdraw using special HELOC credit cards or checks. Call Lakewood Capital Inc. at 888-516-7555 to determine which loan type (fixed rate or line of credit) best fits your needs and to discuss some of the home equity loan benefits listed below.

Benefits of Borrowing Against Your Home:

More Money for Your Effort
As you may know, loan applications are quite a hassle and often don''t provide enough monetary resources to fund large purchases like remodeling your home or sending the kids off to college. Home equity loans only require one application and can provide borrowers with an easy source of large amounts of cash.

Low Interest Rate
The home equity loan interest rate is much lower than credit cards and other consumer loan rates, which is one of the reasons why so many homeowners use their home equity loan or line of credit to pay off their credit card balances. Using a home equity loan as a debt consolidation tool is a viable option for many homeowners, yet it is important that the borrower is committed to limiting any future credit card use.

Tax Break
With a home equity loan, you, the homeowner, can borrow a large sum of cash for any purpose you like and still deduct up to $100,000 of the interest when filing your tax returns. Typically the $100,000 can be increased for any borrowing used to improve your home, such as a kitchen or bathroom remodel. For example, a borrower may spend a total of $100,000 on hospital expenses and college tuition and $10,000 on a new roof, the interest on the entire $110,000 would be deductible as home mortgage interest.

Borrowing against your home has many benefits and can be tempting to use in order to splurge on expensive luxuries. To avoid the perpetual cycle of spending and borrowing, work with your Lakewood Capital Inc. mortgage professional and conduct a careful review of your financial situation before you apply for a home equity loan or line of credit. Our mortgage experts will not only make sure you understand the terms of the loan but also check to ensure you have the means to make the payments without compromising other bills.

Keeping You Informed
Lakewood Capital Inc. is dedicated to keeping you informed of the latest market trends and mortgage options. Visit us online at http://lakewoodcapitalinc.com, or call us today at 888-516-7555, to obtain custom loan options designed to fit your needs and help you obtain your ownership goals.

I take pride in providing useful information that you will find helpful when making decisions regarding your mortgage. My monthly newsletter covers different topics each month to help increase your knowledge of the mortgage industry and recent industry happenings. Please take a moment to review the monthly newsletter and click on the links on the left hand side for more news and resources. Feel free to pass this newsletter along to any friends and family members who might find it useful and contact me with any questions you may have.




Spotlight

A Closer Look at the Foreclosure Rescue Plan

Rescue Plan at a Glance:
400,000: Estimated number of troubled borrowers eligible
$300 billion: Lower-cost home loans
$625,000: New loan cap
$15 billion: Tax benefits including $7,500 tax credits for first time home buyers

With the foreclosure rescue bill signed and in place, the housing and loan market has finally received a much needed boost. In October, when the law is finally put into effect, the Federal Housing Administration (FHA) will be able to back $300 billion in new, affordable home loans for nearly 400,000 distressed borrowers who otherwise would be considered too risky to qualify for government insured, fixed rate loans. The rescue plan is intended to not only benefit homeowners at risk of losing their homes, but also home buyers unable to afford a substantial down payment, lenders looking to minimize the repercussions of client foreclosures and, ultimately, the economy.

Get the basics and uncover the fundamentals of the new program before you decide that a government insured loan is right for you. Below are answers to a few popular rescue plan questions:

Am I Eligible?
Borrowers may only be eligible to refinance their current loan to a more affordable, FHA insured mortgage program if they:

• Use their home as their primary residence
• Have loans that were issued between January 2005 and June 2007
• Spend close to 40 percent of their gross monthly income on all household debt
• Are able to prove that they are unable to keep paying their existing mortgage and prove that they are not intentionally defaulting just to obtain lower payments
• Have retired any other debt on the home (including home equity loans or lines of credit)
• Have the FHA's approval through their current mortgage lender
• Can verify that their total debt does not exceed 95 percent of their home's appraised value

If you feel that your current mortgage and financial situation fit the criteria above, contact Lakewood Capital Inc. at 888-516-7555 to discuss your loan options.

What Will I Save?
The foreclosure rescue plan offers relief to homeowners and incentives to home buyers tight on cash.

Unlike the subprime adjustable rate mortgage that can climb every six months, the reasonable, fixed rate FHA loan offers the borrower a sense of financial security. So whether you are in the market to purchase a home, or interested in refinancing your current mortgage, you are certain to enjoy significant savings and tax benefits, even after factoring in the FHA fees.

Learn more about your potential savings and discuss your refinance options by visiting our office, or contact us directly on our website at http://lakewoodcapitalinc.com.

How Can I Apply?
Lakewood Capital Inc. can help you assess your current financial situation to ensure you qualify for a new, low fixed rate loan insured by the government. Call us today at 888-516-7555 to schedule a meeting.

Keeping You Informed
Lakewood Capital Inc. is dedicated to keeping you informed of the latest market trends and mortgage options. Visit us online at http://lakewoodcapitalinc.com, or call us today at 888-516-7555 to obtain custom loan options designed to fit your needs and help you obtain your ownership goals.