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Abstract:
In my first interview with you entitled, “How to Consolidate Your Credit Card Debt with a Home Equity Loan", Dwight Crawford, a licensed loan officer, explained the difference between a home equity line of credit versus a home equity loan. In the second interview, we discuss the topic of how to choose the right mortgage lender when securing a home equity line of credit.
Griffiths:
Knowing now that either option is simply another mortgage on your house, I would like to have your inside knowledge about how to choose the right mortgage lender.
Let’s say that I’m looking to consolidate my credit card debt, and I now know that I want a home equity line of credit. How do I go about finding a lender? Should I look nationally or locally?
Crawford:
When I am ill I don’t find a new doctor. I don’t change accountants every year. A mortgage should be the same. Start with a lending institution that you have a relationship with. If you have a first mortgage call them first. I am a very large supporter of building relationships with professionals. If you are comfortable with your local banker contact them next. Remember a mortgage, regardless if it is a first mortgage an equity line or equity loan this is one of the largest purchase that most Americans will make. If you are not getting what you want don’t be pushed into the transaction.
Griffiths:
What kind of certifications or licenses must a lender possess for me to even engage them in getting a loan?
Crawford:
All lenders have to disclose their credentials. They have to let you know what States they licensed in as well as all of the professional organizations that they are members of.
Griffiths:
Assuming that a lender had all the right diplomas and licenses on their wall, how do I really know if they are reputable? There must be an easier way!
Crawford:
Referral, Referral, Referral! Ask family, friends or colleagues who they used. If they tell you that the experience was a nightmare, it’s time to find somewhere else.
Griffiths:
Considering that most average homeowners may shop for 1 to 5 mortgages in their lifetime, how does a consumer go about getting competing offers so that they know they’re getting the best deal?
Crawford:
Shop! All lenders due to Federal Regulations have to disclose all offers in writing within three business days from the point of application. The key to these disclosures is to read it all. Rate is only a part of the equation. Review the cost of the loan, the rate, and most importantly are you getting everything that you need.
Griffiths:
A lot of the One Paycheck at a Time readers are looking for long-term solutions to pulling themselves out of debt. By the time they reach the One Paycheck at a Time website, however, their cash flow is typically in crunch mode. From start to finish, how long should a home equity line of credit take to close? Can you walk me through the steps?
Crawford:
Some equity loans can take as little as twenty-four hours depending on the strength of the file. Lenders are looking for proof of income, the value of the home, and a review of any liens that may be on the title of the home. Worst-case scenario the process should not take longer than three weeks.
Griffiths:
Sometimes people just need a low monthly payment and don’t pay attention to the interest rate. When I was in deep debt, prior to being a homeowner, I know that I’ve personally been lured into that trap when I was moving balances around on credit cards. How do I know which loan option to choose, a low monthly payment or a low rate?
Crawford:
The interest rate is always going to be a major component in the decision making process of a loan. But we still have to weigh the benefits of the entire loan. If your equity line has as an example a rate of 9% but your credit cards have rates in the twenties you have to weigh what you are getting for the 9% rate. Are your monthly payments going down? From an income tax point of view, what are you getting from your high rate credit cards verses the return that you are getting from a slightly higher rate equity line or loan?
Dwight Crawford is a licensed loan officer, Certified Mortgage Consultant as well as the Chief Executive Officer of the Charlotte, NC based Crawford & Associates Professional Mortgage Planners. With over 15 years in the residential, commercial and small business mortgage lending world, Mr. Crawford is dedicated to education of his clients to show them that a mortgage is not just a bill that has to be paid but it is an invaluable tool to eliminate debt and to create wealth. For a private consultation Mr. Crawford can be reached directly at 516-395-3246 or by email at crawford.associates@hotmail.com.
Related Articles:
How to Consolidate Your Credit Card Debt with a Home Equity Loan
How to Get a Home Equity Loan with Bad Credit
How to Pay Off Your Mortgage Early
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