125% Home Equity Loans

A 125% home equity loan is a second mortgage loan program that allows you to borrow money even if you have no equity in your home. For those that don't already know, equity is the difference between the value of your home and the outstanding amount that you owe on the mortgage. For example, say your home is worth $100,000 and you owe $90,000 on the mortgage. You would have $10,000 of equity in your home. Now say your home is worth $100,000 and you still owe $100,000. In this scenario you have $0 home equity. This is the type of scenario in which a 125% home equity loan can really be beneficial as even though you have $0 equity a qualified home owner would still be eligible to borrow up to $25,000.

Homeowners who have "no equity" are not the only ones who can benefit from a 125% home equity loan. Consumers who have some equity in their home but do not have quite enough for their cash needs can benefit as well. Also, homeowners who already have a second mortgage but need more cash beyond their existing credit line can benefit by refinancing their existing second mortgage with a 125% equity loan.

125% home equity loans can be used to finance a college education, consolidate debt, home improvement or to just get cash out for any worthwhile purpose. Many homeowners, however, use the proceeds from their 125 loan to free up hundreds of dollars on their monthly cash flow by consolidating high interest rate credit cards and consumer loans. If you have a high monthly credit card and loan debt load, this can be a great way to get your finances under control.

While 125% equity loans can be a great source for needed cash, it is important to know that just as with a traditional home equity loan, a lien will be placed on your house by the lender to secure the loan. This means that when you sell your home you will have to pay the loan off. Therefore, before you take out a 125% home equity loan you will want to make sure that you plan on keeping your house long enough to accumulate at least enough equity to cover the outstanding loan amount. If not, you will have to come up with the difference from your pocket when you go to sell.

125% home equity loans are a niche loan product and will not be available by all lenders. You will need to shop around to find a home equity loan lender who offers this product. On the internet you can visit http://www.equityloansource.com for lender sources and more information on the 125 home equity loan program.

About The Author:

Levetta Rivera is a successful author and publisher of the following financial sites: http://www.badcreditloanshop.com and http://www.militaryvaloan.com