Turn the equity in your home into peace of mind.  There may come a time when you need access to money but due to lack of funds, it seems unattainable.  Financial emergency situations can be overwhelming and just paying your mortgage payments can be daunting.  There may be various reasons you require extra funds such as; high interest debt on many credit cards, sudden and unforeseen expenses, required renovations, life changes in your family dynamics and the list can go on. As a homeowner you have additional options to assist you in, managing your debt, getting some needed renovations, having emergency funds or just relieve the financial pressure.   Also, another reason to consider a Home Equity loan is by consolidating your debts into a home equity loan or line of credit, you have one consolidated payment rather than having several bills from different creditors and lower interest rates.


What is a Home Equity Loan?

Home equity loan often called a HELOC or home equity line of credit allows you to obtain a lower interest rate and a higher credit limit by using the equity you’ve built in your home as security.  With a HELOC, the collateral is your property and it allows you to establish a line of credit for a set amount. It is similar to a second mortgage but ways it differs than a second mortgage is a set amount borrowed, interest rate and is on a term; it is paid an agreed regular basis. With a Home Equity Line of Credit, interest is charged only on the amount you borrow and a limit is set on how much you can borrow. It is revolving and similar to a credit card.

To find out if how much you can afford with a HELOC, here is the calculation. Calculations based on a home valued at 500K with Mortgage Balance of $350,000.  The HELOC total cannot exceed 65% of the homes value while the combined mortgage balance and HELOC cannot exceed 80% of the homes value.

(Value of home x 80%) – Mortgage Balance = Maximum HELOC (not exceeding 65%)

($500,000 x 80%) – $350,000 = $50,000

With the above example, if value of your home is $500k and you wish to renovate, most likely you can get a Home Equity Line of Credit for $50K  as the HELOC amount does not exceed 65% of the homes value (you also need to take your credit rating into a account). This is based on a basic calculation and is only meant as a guide, a Mortgage Broker or Agent can get the numbers of a loan amount you would quality for.


How a Mortgage Broker Can Help

A Mortgage Broker will have information on the various options available for managing your financial situation and they should be consulted at the first sign of difficulty. It is always a good idea to keep your broker informed of any changes in your financial situation, they are here to help. The sooner you contact a broker, the better. Mortgage brokers have encountered many financial situations from their clients and they are experienced and knowledgeable, not only in best mortgage rates, but also in money management and financial solutions. The more information you have to manage your finances, the easier it will be to make the right decisions and put your mind at ease and if detected early, it could be a very simple solution.

The team at Real Mortgage Associates Inc. is comprised of some of the most dynamic and experienced personnel from the mortgage industry. Whether you want to refinance your existing mortgage or make use of your home equity for any purpose that you desire, the decision to refinance requires proper planning and consideration of several factors.  We will provide all the necessary advice and guidance that you might require for your mortgage application, interest rate negotiation, or any other related procedure. We constantly work towards offering you the best solution in the most cost-effective manner.