With a good credit rating, you can get rid of high-interest debt with a low-rate home equity loan. When you borrow up to 25% of your home’s value, you don’t need to own equity to qualify for a second mortgage. With lower rates, you can cut your payments by two-thirds.
Advantages of 125% Home Equity Loans
The main advantage of a 125% home equity loan is that you can secure a lower rate than what you are paying now for your short-term loan. In fact, you are not adding to your debt. Instead, you are trading one exchange rate against another exchange rate.
With lower rates, your payments shrink instantly. You also have the option of using a home equity loan to maintain the same payments, but take less time to pay off your debt, saving you more interest costs.
Financial companies are willing to lend you based on your credit history along with the hope of increasing the property value. Both you and your lender value your home.
125% of home equity loans are for those who plan to live in their home for several years, or at least until the value of their property increases significantly. Consolidating your debt with a home purchase loan increases your choice of terms. So the loan can be for a period of five to thirty years, which affects the repayment and the amount of interest.
Find the best loan interest rate
Take the time to research the best loan rates before signing a loan contract. Many financial companies now offer loans of 125% for home purchases, so you will have no problem finding loan offers online.
Comparing closing costs is just as important as pricing, as these costs can be hidden. By looking at the annual interest rate (APR), which calculates closing costs and interest, you can see who has the cheapest total loan. Your terms will also affect your prices. The shorter the loan, the lower the price.
When you find the right loan, immediately begin the application process to secure the quoted price. With the online application, you will receive the final documents within a few days. After that, you can pay off your debts in a few weeks.