Business & Finance mortgage

Using Your Home as Your Biggest Investment and Asset

For most of us, our home is our biggest investment. Purchasing a home and accumulating equity during the life of a mortgage also makes this investment a valuable asset which a homeowner can use in several ways. Homeowner Loans, second mortgages and even secured personal loans all become a bit easier to obtain when you have equity to use as collateral.

If you are in the market for a home and are in the process of shopping for a mortgage be sure to have a working knowledge of the two major types of home loans that are available to you. The first type would be a fixed rate loan. This type of loan has a fixed interest rate for the life of the loan which means it doesn't change regardless of what the national rate does. This would obviously be a good thing if the national interest rate skyrocketed because your interest rate would stay the same. This can also be quite helpful when managing your money because your monthly payment remains consistent and there are no surprises.

The second type of home loan would be the variable rate loan. Here, the interest rate will fluctuate along with the national rate. This would obviously be a good thing if the national interest rate went down during the life of your loan. There are options to consider on these loans, some which allow you to draw cash on the equity you have accumulated and options which allow you to pay more than your monthly bill in order to accumulate equity faster.

Once you have accumulated a decent amount of equity on your home loan there is the option to take out a homeowners loan otherwise known as a home equity loan. This type of loan is a form of secured loan and is usually much bigger than your standard personal loan. Personal loans can be obtained for amounts not exceeding $15000 while homeowner loans can be obtained for much larger amounts. Rates on a home equity loan are usually much cheaper than standard personal loans because your property is attached as collateral making it a sure thing for lenders.

As you can see owning a home gives you a great advantage over others who do not have home equity. Real estate is big business and owning a home is indeed a slice of the American dream. Tread carefully though, the decisions you make when purchasing your first home as well as procuring a homeowners loan will be with you a very long time.

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