Can you use a home equity loan for something other than a home?
I need a loan & some people had suggested I look into this because of the lower interest rates, instead of using high interest (not to mention EVIL) credit cards. But it's not for a home & I don't have enough collateral for the amount I'd like to borrow. I have a great credit score over 700, but also have student loans & other credit card debt, which I am very good at paying at, & make enough to make the payments comfortably. If I can't get a home equity loan, what kind of loan can I get, & at what amount & rate should I expect? I've looked around online, but all the bank terminology does nothing but confuse me, so anyone who could explain this a little more "user friendly" would be helpful!
It's not for home improvement. Actually, it's basically a business expense, but I'm not sure if a bank would consider this a business type of loan.
Oh, & one *minor* detail... I don't own a home :(
- Anonymous1 decade agoFavorite Answer
You can use the equity loan for anything. They will literally give you a check book and debit card in many cases. You are basically borrowing against the equity you have in your home. The interest you pay on this loan will be tax deductable and that is also what makes it more attractive than a credit card or personal loan. Be very carefull! Turning your home in to an ATM machine is what has gotten many people in trouble and is what has caused the "credit crisis" that we are seeing right now. The stock market has plunged because of this and the negative effects on the economy are still being played out. I would only do this if it is necessary or if the loan will add value to your home. You may find yourself in a position where your home is worth less than your first mortgage and equity loan which means you will not be able to sell your home if you have a financial hardship and you may be forced to forclose like all those people out there...
- sneezewhizLv 61 decade ago
You have to own a home to get a home equity loan. Equity is the amount of value the house has that you don't owe.
Say you put down 5k on a 100k condo, and after living there a year they tell you the condo is now worth 120k. You owe 95k on a 120k home, so you have 25k equity, more or less.
You can then get a 25k home equity loan, and use the money for a car, a face lift, new furniture, or a big bag of crack, whatever you want.
You can try to get a signature loan or unsecured loan, but it's going to be at a high interest rate because it's a high-risk loan.
You can get your parents or someone to co-sign a loan based on their home equity, but then it become their risk and they own you. They get to judge you. They get to ask what the loan is for.
- RebeccaLv 71 decade ago
In some cases your total loans may not exceed a certain percentage of the home value.
You should not be looking to start a business, which will drain you dry in the first years, until you get some of the debt paid down.
Never a good idea to jeopardize your home for fancy or credit card debt.
- 4 years ago
I own my home, can I use the home equity loan for anything I want?
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- 1 decade ago
Seek a professional financial advisor, your finances seem to be in disarray. Looking for more loans while you have so many other debts is a serious indicator of financial trouble. If you make enough to make the payments comfortably, you should be able to pay them off soon or reduce your debt significantly.
- furneLv 43 years ago
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- t.sLv 51 decade ago
you can as usually the loan is just put into your bank account and you spend it on home renos or what ever we were told by the bank manager to say a loan was for the house and look at buying a business with the money
- Da BLv 41 decade ago
Many mortgage companies will allow YOU (over 700 credit score) to refi your home for whatever you need--not just home improvements. Ask for a "home equity refi(refinancing)". Shop around for the best deal as there are many companies who WANT YOUR BUSINESS. Good luck!