When you’re having cash flow problems, you might consider a home equity loan in Utah. These types of loans can be a lifesaver, or a way to achieve your dreams. But it’s good to consider the ins and outs of a home equity loan before deciding to apply for one. The mortgage lenders at Integrity First Lending help clients get approved for home equity loans in Utah.
What Is a Home Equity Loan?
When you get a home equity loan, you are borrowing against the equity in your home. The amount available to you is the value of the home minus the amount you owe on it. If you have owned your home for many years, the value of your home might be much greater than it was when you bought it. So you may have only paid $100,000 toward your principal, but have $250,000 in equity, due to the increasing value of your home.
What Is a Home Equity Loan For?
The beauty of a home equity loan is that it can be used for anything. No one asks you what you will use the money for. You can pay off school loans, buy a new car, lend your children money for a down payment on their own homes, do home improvements or take a fancy vacation.
That being said, there is some accepted wisdom about what type of expenditure is and is not a good reason to take out a home equity loan. Some of it comes down to math.
Should You Get a Home Equity Loan?
If you’re paying on a student loan that’s 5% interest and you could refinance your home at 2.8% to take out some of the equity to pay off that debt, you could save a lot of money. However, if you drop below 20% equity in your home and you have to start paying PMI, that will eat into some of your savings.
If you want to take out a home equity loan in Utah to improve your home through expansion or renovations, this is usually considered a worthwhile investment.
Taking out a home equity loan to buy a new car or finance a fancy vacation might not be a great idea, however. These are not investments that will improve your financial outlook. Similarly, you should be careful if you plan to take out a home equity loan to lend someone money, even if it’s a family member, because they may not be able to pay the money back.
Taking out a home equity loan to pay bills should be a last resort. If you have lost your job and fallen on hard times, your home equity might be all you have right now. But if you dip into it and you are unable to pay your mortgage later, you could lose your home.
Best Mortgage Company in Utah
We hope our mortgage lenders’ advice was helpful to you in deciding whether to get a home equity loan in Utah. When you’re ready to apply, use our online tool or make an appointment to come in and apply in person. We’re here to help!