Equity Mortgage

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Equity Mortgage

An equity mortgage is when a lender gives a lower interest rate in exchange for a portion of the profits you, the borrower, sells the home.  Bother the interest rate and the portion is negotiated between you and the mortgage broker.  This can have a lot of benefits.  If all that matters to you is the house and you have a well paying job or if you don't have much money and are willing to sacrifice later, this may be good for you.  Interest can add up over time, especially over the longer mortgages.  The shorter the mortgage term the less you will pay in interest, which means the less the interest rate will effect the mortgage.

For long term mortgages, a lower interest rate can significantly reduce the amount you end up paying.  One of the main things the lender is banking on it that property values and home values keep on going up and that the house wont be a mess.  This can work to your advantage if you plan on fixing up the house. This will likely make the mortgage lender  more likely to want to go for an equity mortgage.  For short term mortgages, the lower interest rates wont help you as much.  If you plan to pay the house off fast.

Bigger House?

An equity loan may be good if you will have trouble paying for your house.  An equity loan could also be useful if you would like to spend more money fixing up the house right away.  You just have to remember, that someone else is going to get some of the money from your hard work, but of course you would be living in an environment designed by you, for you.  In addition to spending the extra money fixing up the house, and adding things to it, you might be able to pay it off faster and avoid paying even more interest.

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