The Risks Associated With a Home Equity Line of Credit

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To fully understand what a home equity line of credit or a HELOC is, you need to chunk this into two terms: home equity and line of credit.
-Home equity – is the market value of your home less the total amount of debts that are associated with or registered to it.
-Line of credit – also referred to as a credit line, it is an arrangement wherein a bank or a lender extends a specified amount of credit to a borrower for a certain period of time.

Combining the two, you get the term “home equity line of credit” (obviously) which is a form of revolving credit and which takes your home equity as collateral. Anytime you need money, you can make use of – or in mortgage lingo, DRAW from – your credit line. Basically, a home equity line of credit works in the way a credit card does. As long as you don’t go beyond your credit limit, then you can continue to draw money for needs such as medical bills, tuition fees and home improvement expenses.

Please note that using money from your home equity line of credit should be done sparingly. This should only be used for really important payments or purchases. Drawing money from your home equity line of credit to pay for everyday expenses is not a wise idea. This is because of the ultimate risk that’s associated with this financial option – as outlined below:

The Ultimate Risk: Foreclosure

In this kind of financial option, non-payment of your dues could result to the foreclosure of your home, as is the case with other mortgages – Toronto or elsewhere. Therefore, you should make sure that you attend to your dues in a timely manner. Although you can only pay the “minimum,” it’s always a wiser idea to pay more than that. This will ensure that the amount for repayment will considerably get lower – and to assure that your monthly payments are not only used to cover for the interest rate.

Other Risks

Note that with a home equity line of credit, the “health” of your credit limit largely, if not entirely, depends on the market value of your home. If you lender senses that the value of your home significantly decreases or if they have sufficient reason to believe that you cannot keep up with your monthly payments, they may either freeze your account or reduce your credit limit.

In both cases, you should talk with your lender. Ask them how you can restore your account. You should be able to prove to them that the value of your home has not considerably decreased. You should also show to them that you are still well in the way of being able to make the necessary payments on a regular basis. Your argument would bear more weight if you can show some proof. So provide documentation if you must.

When talking doesn’t seem to solve the problem, then you may consider shopping for another line of credit. Of course, look for the best mortgage rate – Richmond Hill or elsewhere. With any luck, you can get an arrangement that allows you to pay off your original home equity line of credit with another one. Mortgage and credit professionals run aplenty and they’d be more than happy to be of service to you.

7 Commonly Forgotten Home Maintenance Tasks

7 Commonly Forgotten Home Maintenance Tasks
7 Commonly Forgotten Home Maintenance Tasks
Photo Credit: Greg McGill/

Some often forgotten home maintenance tasks become memorable when they cause a big repair bill. We have identified 7 commonly forgotten home maintenance tasks which can be costly when they are overlooked.

Clean Out The Gutters

Gutters can accumulate leaves, bird nests and other debris which will weigh enough to pull the gutters away from their mounting. This condition will cause water to run down the side of the home and into the foundation. These gutters will not drain properly causing the water to flow over the side and onto the landscaping.

Hire A Professional To Inspect The Roof

The roof should be inspected once a year to find the problems that can cause water to leak into the home. Caulking, sealant and flashing should be inspected because these materials can also allow water to leak into the home when they are defective. The roof decking should be examined to determine whether it is rotting. Curled shingles and shingles out of place need to be replaced or nailed down securely. One other important part of the roof is the drip edge since this is what channels the water into the gutters.

Clean The Chimney

Creosote can build up in the chimney. This is a very flammable substance, and it can cause a fire. Critters can build nests in the chimney, and they will cause a problem when the fireplace is used.

Service The Heating And Cooling System

These systems should be inspected and serviced before each season begins. Routine maintenance will prolong the life of the equipment and help prevent emergency repairs. Well-maintained systems will be energy-efficient. Checking the thermostat is also essential.

Flush Out The Water Heater

Mineral deposits will build up over time on the bottom of the tank. The result is corrosion which causes the tank to leak. These deposits also make it more difficult to heat the water. The result is an unnecessary use of energy.

Clean The Refrigerator Coils

Dirt, dust and pet hair will clog the coils to the point where they can no longer release heat removed from the refrigerator. This condition makes the motor work harder to release heat through dirty coils.

Check The Slope Of The Soil Around The Foundation

The soil around the foundation should slope away from the foundation to prevent water from becoming a problem. Water that builds up can result in hydrostatic pressure which can cause water to push through the foundation into the basement. Hydrostatic pressure is the main cause of basement leaks.



3 Ways To Cut Home Energy Costs

3 Ways To Cut Home Energy Costs
3 Ways To Cut Home Energy Costs
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Home energy use can be very expensive, and the high expense of home energy sneaks up on us. Most homeowners don’t know how much energy an appliance or a technology item really uses. It isn’t easy to find out the energy use of any one item, not to mention every item collectively. Regardless, saving energy is possible by taking a few steps to reduce energy consumption. The following steps have been proven over time to save homeowners money and also to prolong the life of some equipment.

Set the Water Heater Thermostat 120 Degrees

Most households only require the water heater temperature to be set at 120 degrees. This temperature will also prolong the life of the water heater by slowing mineral buildup in the tank. This temperature poses little if any health risk. if a family member has a suppressed immune system or a chronic respiratory disease, you might consider setting the temperature at 140 degrees.

Change the Furnace Filter

A clean furnace filter puts far less stress on the furnace and its fan motor particularly. A dirty filter forces the furnace to work harder because the filter restricts the air flow. Thus, the air quality in the home will not be as comfortable, and it might even be less healthy because the allergens, dust and other floating material cannot get through the filter. The frequency with which you change the filter depends on several factors. Pets in the home may require a frequent change as might a home located in an area where there is a lot of dust in the air. Of course, and a filter that appears to be dirty is dirty. Several opinions exist on the best type of air filter. Check this website for an excellent discussion on filters:

Caulk Around Doors, Windows, Outlets and Switch Plates

These areas will allow outside air to enter and inside air to escape to the outdoors. You can also buy foam pieces that fit behind the outlet and switch plates. Caulking around the door and window frames is an excellent idea for saving energy. Infrared technology studies have been conducted on homes that do not have adequate caulking and these studies clearly demonstrate that air does escape through these unprotected areas. Installing new weather stripping around exterior doors is also an excellent idea. Make sure that the door thresholds seal the bottom door opening. Have someone outside watch while you shine a flashlight under the door. If the light comes through, then the threshold needs to be adjusted.

How To Determine The Best House For You

How To Determine The Best House For You

Buying a home is exciting, and the process can often be terrifying. Searching for your dream home, a place where living is at its best and memories are made is not difficult when you follow some guidelines. The question in the minds of many buyers is how do we know if a house if right for us? We have put together some ideas on how to determine the best house for you.

The first and only way to begin your search is to figure out how much you can afford to pay not just for the purchase of a house, but also for the monthly payment. Include in this assessment how much more you will spend on utilities and maintenance than you are spending currently. A home you cannot afford becomes a nightmare instead of a dream.

Decide on how you want to live rather than where you want to live. Focus on the features of a house that will make living in it enjoyable. Nice views are wonderful, but it is unlikely that you will enjoy the views more than you will enjoy your house. Look at the house from the viewpoint of practicality. If you have children, will they be safe in the house? Look at the amount of time required keeping up the house.

Can you imagine your furniture fitting nicely into the house? Will you need to buy more furniture? Does the house have a nice flow, or is it chopped up meaning that living in it could be frustrating. Does the house feel good? You will find some houses that just are not comfortable to be in.

Trust your intuition. Does the house impress you in the first 15 seconds, or is it depressing? Be sure to consider cosmetic repairs. Perhaps minor painting or some changes in decor will make a major difference for you. Can you imagine it being a happy house? Pay attention to your reactions as you move through the home.

You will also need to think about buying a resale home versus buying a newly constructed home. New construction will not have the same problems that older homes can have. Of course, putting in a yard and buying window treatments is an added expense. While you can get a home inspection on an older home, all of the problems may not be readily identifiable.

Ask the local police about the crime statistics for the area you are considering. Also ask the local government authorities if the neighborhood will be subject to any planned special tax assessments. Consider the quality of the schools even if you do not have children or do not plan to have children. The schools will affect the resale value of the house.

These are just some of the factors that you should consider when looking for a house to buy. A qualified realtor who is experienced in the area you want to buy can be an invaluable resource in your search for a house.

Mission Viejo View of Property

10 Major Mortgage Mistakes To Avoid

10 Major Mortgage Mistakes To Avoid
10 Major Mortgage Mistakes To Avoid
Photo Credit: Tomasz Guzowski/

Getting a mortgage is not easy, but it can become far more difficult than it needs to be due to some mistakes that mortgage applicants make. Here are the 10 major mistakes to avoid, and you avoid these with some planning and discretion in managing your finances.

1. Not Checking Your Credit Records

Check your credit history at least six months before you intend to apply. This includes checking your credit scores including the FairIssac score.

2. Applying For Credit Just Before You Apply For A Mortgage

Lenders will consider you to be a greater risk if you apply for new credit just before or while you are applying for a mortgage. Your credit score might drop causing you to either not be approved or approved for a higher interest rate.

3. Failure To Consider The Total Housing Costs

Your mortgage payment includes principal and interest, but taxes and insurance costs are added. All of these costs figure into the percentage formula used to qualify your income for mortgage repayment. Divide the mortgage payment by your gross income and the result should be around 25%.

4. Not Having Assets In Your Account For At Least Two Months

Lenders will want to see assets that you have accumulated and not used for living expenses. Don’t borrow from a relative days before applying. You can be sure that the underwriter will find this transfer.

5. Changing Jobs Frequently

Lenders look for stable employment and a job history in your field. Underwriters are wary of applicants who have gaps in their job history and fail to stay in one job or one field.

6. Not Getting A Pre-Approval

There is no substitute for good preparation when you want a mortgage. Make sure you can qualify for a mortgage before you even begin to look at homes. A pre-approval is better than a pre-qualification because it is based on a more thorough review of your financial status. Realtors will be more willing to work with you when you have been pre-approved.

7. Not Shopping For The Best Mortgage

Don’t let a pre-approval confine your mortgage search to that lender. A broker can shop your pre-approval at a number of lenders. You will want not only the best interest rate bit also the best terms and the lowest fees. Knowing closing costs in advance is essential.

8. Spending Time And Energy Looking At Unconventional And Complex Mortgages

Go with a mortgage that you can understand. Avoid paying interest only or adjustable rate mortgages. A fixed rate, fixed long-term mortgage is the best.

9. Forgetting To Lock-in Your Mortgage Rate

Mortgage interest rates can change daily. If you find an interest rate you like, then lock it. This means that the rate will be good for the number of days it is locked for. Always get the locked rate in writing,

10. Neglecting To Read The Mortgage Documents

Even though it may be a chore, take the time to read and understand the mortgage documents. This is time and energy well spent.


5 Tips To Help You Sell Your Home Faster

5 Tips To Help You Sell Your Home Faster
5 Tips To Help You Sell Your Home Faster
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If your home is not selling as fast as you think it should, then consider these 5 tips to help your home sell faster. Keep in mind that you should prepare your home to be sold with the same attention that you would prepare yourself for that all important job interview. The principle is the same; you want to attract the attention of buyers. A few simple projects can make the difference in how your home sells and even how much it sells for.

1. De-clutter
You may find that many of your possessions remind you of enjoyable times and successes in life. You may enjoy all of the over-stuffed furniture. However, all of these make your home look cluttered, too small and unattractive to buyers. Remove any indications of political party affiliations and signs of other organizations that may be objectionable to some buyers. Although your religious beliefs are important to you, a home that is filled with religious articles is not going to be attractive. Put items in drawers or closets rather than leave them scattered about. You can rent a storage locker to store excess furniture as well as boxed items. Now, you can imagine that buyers will visualize a home that they could live in.

2. Make What You Have Look Better
A few simple fixes can give your home a more modern feel. Upgraded fixtures will be attractive to buyers even if they might not like the fixture you choose. You can upgrade items without replacing them. For example, light fixtures can be painted a pewter color and doorknobs can be decorated with appliques. Replacing faucets is always a good idea, but if you can’t afford to do this, then clean them thoroughly and use a product that will make them shine. The concept at work here is to help buyers realize that they will not have to spend a lot of money immediately to make the home attractive.

3. Make Sure The Rooms Are Neat And Clean
Children’s bedrooms should reflect how the rooms can look when everything is in its place and the beds are made. Clothes should not be scattered over the floor. The colors in the rooms should be neutral if possible. Make the closets look better by not stuffing clothes into them. Clean carpet and clean tile are essential for attracting the buyers’ interest.

4. Change Colors That Over-Stimulate
Neutral colors attract buyers, and the bright red, purple and yellow colors are a turn-off for buyers. Area rugs should be designs that are attractive and in colors that compliment the rooms.

5. Curb Appeal Is Important
Your home’s curb appeal will be the buyers first visual image of your home, and it will create their impression of the inside of your home. A yard full of weeds or a flower bed with overgrown plants will deter buyers. Grass that is not cut and trimmed properly is not attractive.

For more information regarding Jerry Stiles and home loans, visit the website or Facebook page!

Breaking Down The Costs Of Buying Your First Home

Breaking Down The Costs Of Buying Your First Home
Breaking Down The Costs Of Buying Your First Home
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Understanding the costs of buying your first home is something you need to do before you begin the home search process. If you fully understand all of the costs ahead of time, then you will avoid disappointment. We have put together a list breaking down the costs of buying your first home.

If you qualify for an FHA loan, you will only need 3.5% of the purchase price as the down payment. However, if you need to, or choose to, obtain a traditional mortgage your down payment could be as high as 20%. A mortgage broker can help with this issue.

When you decide to make an offer on a home, you will be required to make an earnest money deposit which is held in escrow. Earnest money tells the seller that your offer is sincere. This money is held by an independent third party. They are refundable if you have a legal reason to back out of the contract. For example, the home inspection reveals serious defects, or the appraisal is too low compared to the agreed price. Otherwise, the earnest money deposit goes toward your down payment.

A home inspection is one of the most important steps in buying a home. You may believe that the home is in perfect condition, but it may not be. The expense of hiring a home inspector should never be viewed as an unnecessary expense. Don’t cut corners here. A quality home inspection performed by a highly qualified inspector may cost about $300 to $500. Do your homework before hiring an inspector, because you want an inspector who is highly trained and very skilled.

You cannot avoid having the property appraised by a professional appraiser who will decide the value of the home. Their decision may be what you agreed to pay or it may be less. Occasionally, it is more. However, if the appraisal comes in at less than what you agreed to pay for the home, then you have only one recourse, and that is to put more money down. Of course, your realtor may be able to renogotiate the price.

Your realtor or mortgage broker can give you a good estimate, but it can only be an estimate. The final number is usually available a day before closing. The closing costs can be between $5,000 and $12,000 depending on the taxes, insurance, mortgage fees and other charges which are difficult to estimate ahead of closing.

For more information regarding Jerry Stiles and home loans, visit the website or Facebook page!