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Home Equity Loans.

Are you swamped with a number of high-interest debts? If you are, this calculator can demonstrate the effectiveness of consolidating your debt into one lower interest loan. It’ll take you longer to pay it all off, but you’ll see that your total monthly outlay for debt will decrease significantly.

For as many as ten debts, enter the required information, including principal balances, interest rates, and monthly payment amounts. Under “New Loan Information,” indicate whether or not you’ll need extra cash, and then input the necessary information pertaining to your new loan.

Click on “Calculate New Loan” and you’ll see a detailed breakdown of your monthly costs now versus your monthly costs under a consolidated loan plan.

Enter Any Debts You Want to Consolidate

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New Home Equity Loan or HELOC Info

Additional Cashout Interest Rate Years Closing Costs Income Tax Rate % Deductible


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Current New Loan
Total Principal Balance:
Effective Rate Before Taxes:
Effective Rate After Taxes:
Total of Monthly Payments:
Monthly Tax Savings:
Monthly Payment Reduction:
Total Monthly Savings:

* While mortgage interest is still deductible from personal income taxes, after the passage of the 2017 Tax Cuts and Jobs Act the cap on deductible mortgage debt has been lowered from $1,000,000 to $750,000 for married couples filing jointly and $375,000 for individuals. Debt that is considered tax deductible has to be considered mortgage origination debt or directly replace origination debt. This means if the debt is used to purchase a home or substantially build or improve a home then it typically qualifies, whereas debt that is used for other purposes like cash-out, consolidating other debts, etc. does not qualify. For loans which serve both purposes in combination, the tax impact calculation is complex & may require the assistance of a financial advisor. It is also vital to keep receipts for major home improvement projects if you intend to claim the deduction.

By default the above calculation on "effective rate after taxes" is done as per the old law where it presumes all mortgage debt qualfies. If you know that only 60% of the total debt qualifies then you could adjust the setting for the percent of debt that qualifies for deduction to 60% to better estimate the effective blended interest rate. If you are unsure what percent qualifies you can get a rough estimate by adding together mortgage and major home improvement expenses and dividing that sum by the total sum of debts. It is advisable to seek a financial advisor before making major financial decisions with tax implications.

Take Advantage of Current Low HELOC Rates Today!

 

What You Should Know About Home Equity

Debt Relief.

It's cliché, but it's true: Home is where the heart is. If you own your home, however, that piece of property can hold so much more than your heart. You can use your home's equity to take out a loan, a loan that you can use to pay pressing bills, carry out home repairs, or take a once-in-a-lifetime vacation. Regardless of what you might use the extra money for, you probably have questions about what it means to take advantage of your home's equity and your different options for doing so.

There are two ways you use your home's equity for credit: You can take out a home equity loan or a home equity line of credit (HELOC). Both have distinct advantages and features, making them appropriate for different situations. Here are some of the key facts about each and what you need to know before you jump into using either type of equity loan.

What They Are

To understand home equity loans and HELOC, you need to understand home equity. Equity is the difference between how much the home is worth and how much you owe on the mortgage. In other words, if your home is worth $300,000 and you only owe $200,000 on your mortgage, you have $100,000 worth of equity that you could use for a home equity loan or HELOC.

Home Equity Loans

A home equity loan, otherwise known as a fixed-rate home equity loan, is fairly straightforward. You apply for a second mortgage through a bank or other lender, and you receive a lump sum of money. A loan like this is usually at least $10,000 in value; most lenders don't like to give out small amounts of money based on equity. As with any other sort of loan, you must make minimum monthly payments and meet the deadline for final repayment of the loan.

HELOC

A HELOC is a variable-rate loan that works almost like a credit card. You gain approval to take out a certain amount of money, and you can use it as you need it. With a HELOC, you use a card or special checks to withdraw money. Monthly payments vary. Unlike a credit card, a HELOC has a fixed term, by the end of which you must repay the borrowed amount in full.

What They Can Do for You

Under what circumstances might you take advantage of your home's equity? Both home equity loans and HELOC are handy if you want to consolidate other debt — that is, if you want to combine your credit card and other payments into one payment that costs less overall each month. In other situations, however, one of the types of loans may serve your needs better than the other.

Home Equity Loans

Because home equity loans furnish you with a large lump sum, they are often the best option if you have a big project in mind, such as a remodel or a spectacular around-the-world trip. Such a loan may also be appropriate if your child is headed to a top-notch school and needs help covering tuition and other fees.

HELOC

A HELOC, on the other hand, is nice if you're unsure of how much money you'll need or if you want a financial cushion for a large undertaking. For example, if you are starting a business, a HELOC can help you cope with unexpected expenses that would otherwise wreak havoc on your budget.

The Advantages of Using Your Home's Equity

Leveraging your home's equity comes with two huge advantages: A low-interest rate and potential tax benefits.

Both types of loans typically come with a low-interest rate because you use your home as collateral, which makes lenders see the loans as low-risk ventures. Typical credit card interest rates can be anywhere from 13 percent to more than 25 percent. For home equity loans and HELOC, the average rates are much lower. As of late October 2014, the average interest rate for a HELOC was 4.79 percent and the average interest rate for a home equity loan was 6.17 percent.

You should consult a tax expert to see if you can reap any tax benefits from leveraging your home's equity; don't be surprised if the answer is yes. Home equity loans boomed in popularity in the 1990s because "homeowners can borrow up to $100,000 and still deduct all of the interest when they file their tax returns."

Why You Should Think Twice

Surely, using your home's equity to acquire money when you need it is a solid option for people who have a stable income and a plan for repaying their debt. Anyone who thinks about taking out such a loan, though, should carefully consider the potential downsides.

One major risk involved with using your home's equity — for either a home equity loan or HELOC — is that, since you use your home as collateral, the inability to pay may result in foreclosure. Both home equity loans and HELOCs are types of mortgages, and you should treat them the same as a regular mortgage.

Also, bear in mind that home equity loans and HELOCs come with many of the same upfront costs as did your first mortgage. You may need to get an appraisal on your home, pay an application fee, and face closing costs.

Make sure you scrutinize every word of any loan agreement. Some equity loans come with fees for paying the loan off early. Also bear in mind that some lenders may try to pressure you into making a commitment before you're ready; don't give in. Just like you did while you wanted to take out your first mortgage, you should shop around for the best deal. Don't sign anything until you understand all the fine print involved.

Should you use your home's equity to get that sports car that makes you go weak in the knees or to pay for an exotic vacation? Maybe. Home equity loans and HELOCs can pave the way to you achieving your dreams, or they can spell out financial trouble. Examine both your goals and your budget before you leap into any new financial adventure, especially one that involves your precious home.