Most people are already aware that a home is a good investment. Unlike a car, homes generally increase in value over the years. This increased value is known as your home’s equity. While homeowners are generally aware of this, it’s not as obvious or as easy to tap into your home’s equity. Fortunately, there are traditional and alternative finance options in Chicago.
When you refinance your home, you replace the existing loan with a new debt obligation. One major advantage is that homeowners may be able to get a new loan with lower interest rates. This is a good option to use this money payoff your higher interest rate debt, or if you need to consolidate other debts into the new loan with one lower monthly payment.
Unfortunately, refinancing is dependent upon your credit score. If you’ve managed to maintain a good credit score that is in line with bank lending requirements, this can certainly provide a benefit to you. However, if your credit score is not up to bank standards, you will not qualify for a bank loan and you may be stuck needing cash with equity in your home that you cannot access. In circumstances like this, it’s good to know you have other options like the SKYDAN Equity Program.
Home Equity Loan
A home equity loan taps into the value of the equity in your home – the equity in your home are used as collateral for the loan. If you need cash immediately, a home equity loan is a good potential option. However, the loan is a one-time lump sum with agreed upon monthly payments with interest. Home equity loans are often used to provide money for renovations or for any number of reasons. – this can be of the major perks of a home equity loan as the funds aren’t restricted.
A home equity loan typically demands a good credit history. If you have outstanding debts, late payments, a bankruptcy, or any other issues with your credit history, you probably won’t qualify for a home equity loan. The requirements for a home equity loan are often quite strict, and there’s generally little room to negotiate.
Home Equity Line of Credit
A home equity line of credit (or HELOC) is similar to a home equity loan, but it functions more like a credit card. Like a credit card, a HELOC has a credit limit and you are allowed to draw down on that credit on demand, where. Alternatively, a home equity loan provides a lump-sum amount of money, with a HELOC you can spend as much or as little as you want within your approved credit limit. A HELOC gives you flexibility and control over your spending – although you still have to make payments every month and if you default, the lender will likely come after your home.
Home Equity Partnership Program (The SKYDAN Equity Solution)
Options such as refinancing, home equity loans, and HELOCs all require monthly payments. Our home equity partnership eliminates these monthly payments. Instead, the homeowner leases the home back from SKYDAN Equity for a term up to two years and rent payments are deferred for that same period of time. At maturity, the homeowner has the option of repurchasing his or her home for the cash received plus deferred rent or selling their home at market price – keeping all appreciation upside above and beyond the deferred rent due. Additionally, a credit score is not a factor in the SKYDAN Equity Program – you’re the equity value in your home is the primary factor taken into account to determine whether or not you qualify, NOT CREDIT SCORE. This means that even if you have no credit or bad credit, you may still qualify for our program.
It’s a good idea to consider alternative financing options in Chicago, IL. You never know what the best choice will be. If you’d like to learn more, contact the experts at SKYDAN Equity Partners.