If you are looking to buy a home in Santa Clara, CA, or if you already own a home in Santa Clara, CA, then you need to have a basic idea of what a mortgage is, what a home equity loan is and how refinancing works.
A mortgage is money that your lender loans to you to so that you can purchase a house. It is also a savings and investment program. The home you purchase is the investment and the money you pay to the mortgage is the savings.
Owning a home is money in the bank. Homes usually increase in value over the years, instead of decrease. When you pay your mortgage payments, you pay both to the interest of the bank and the principal amount of your mortgage. The interest is gone because that is the bank’s money, but the money you pay to the principal of the mortgage is yours. At first, when you get a mortgage, more of your payment will go towards interest, but as time goes by, the percentages will equal out and eventually, you will be paying more towards the principal of the mortgage than in interest. This money that you have paid to the principal of your mortgage is called home equity and it is money that you can borrow against. Also, when you sell your home, you will get that money back plus the increase in value of your home should recoup the interest that you paid to the lender.
Owning a home is an asset and could be viewed as an investment in your future. You can get a home equity loan to get you out of financial hardships, to finance college education for your children, pay off unexpected medical bills or go on a dream vacation. The choice is yours because it is your money.
Home equity loans come in two basic types: revolving credit and lump sum cash.
Revolving credit home equity loans, also called open loans, can be made for up to 100 percent of the equity in your home and the money is available to you on a revolving basis. Basically, you will have an account with the home equity monetary amount in it. You can withdraw and use the money as you need it and pay at least the minimum monthly payment each month (the interest on the loan). If you pay more than the minimum interest-only payment, that money rolls back into your home equity account for you to use again.
Lump sum cash home equity loans give you a large, lump sum of cash all at once up to 100 percent of your home’s equity amount. These are known as closed home equity loans. After you are given the lump sum of money from your equity, you then begin to pay the sum of the home equity loan back to the bank, with interest, in monthly payments.
Both mortgages and home equity loans use your home as collateral. This means that the lender places a lien on your home and when/if you sell the home, the lender gets their money back first. Also, if you do not make your mortgage payments, the lender can foreclose on your home to get back the money they loaned you, plus whatever legal fees they pay to foreclose.
You can also refinance your mortgage with a new mortgage. However, it is important to note that refinancing your Santa Clara, CA mortgage will mean a new mortgage with new terms and a new interest rate. It also means that your new mortgage will pay out your other mortgage and there may be penalties for doing so.
Getting a mortgage, home equity or refinance loan in Santa Clara, CA, does not need to be intimidating. Fill out the form below and one of our qualified lenders will get back to you and help you with the process involved in obtaining a home equity loan, mortgage or refinancing your mortgage.
