Home Equity Loan

Equity Loan allows people to borrow money by pledging their house as a guarantee. The loan money is free of tax because it is not an income. The person pledging their property can receive the loan in a single payment, or is offered a check book to borrow money against the pledged property. The interest to be paid on an equity loan is much lesser than other loans because the person before receiving equity loan has pledged his/her house.

An equity loan allows a borrower to borrow money by involving collateral. The money borrowed can be paid off when the property is sold or whenever the borrower can afford to pay it back.  There is no stern schedule to follow when it comes to paying back the loan. Some banks also lend money against an equity loan to facilitate the borrower.

There is no specific time slot mentioned at the time of lending the loan, as to when the person has to pay back the equity loan.

The amount can be paid off whenever the borrower has money, or once the house is sold.

The interest rate charged on an equity loan is considerably low than other loans e.g. credit card debt; because equity loan includes collateral and the other one does not.


Equity loans are easy to get as the property that is pledges can easily cover the amount of the loan being borrowed. These loans have lower interest rates, and they can be used to get whatever the loan borrower desires. The amount received on such a loan is tax deductible because it does not qualify as an income.

Another favorable point about equity loans is that a person can be eligible for the loan even if they have a poor credit score, unlike other financing loans where the person with a good credit score is considered more likely to be given the loan. A person applying for an equity loan can get fairly higher amount of money as a loan.

The most common usage of such a loan is paying for school tuition, college, and funds or paying for a holiday.  In the past borrowing an equity loan was considered to be the best available option to pay for children’s education because of the interest rates being so high, but not anymore, now loans for educational purposes are a better option to pay for a child’s tuition.

Equity loans have some disadvantages as well, if a person has invested the money in a child’s college or school tuition, and they fail to pay it according to the time slot planned, the child’s future will be in jeopardy along with your home. Another factor to really think about is that now there are a lot of scams going around, where the lenders trick the borrower into pledging their house and offer very attractive deals, and when the borrowers fails to pay up, they end up losing their home.

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Bad Credit Home Equity Loans

Home equity loans for bad credit score borrowers are available at slightly higher interest rates. These loans are available to homeowners that are holding equity in their homes and are in need of cash. Such borrowers can use equity in their homes to cover the amount of loan which they have requested.


You can find bad credit home equity loan by a variety of sources. You can go through yellow pages, you can search online using specific keywords on search engine, and you can also ask any of your friends or relatives who have already taken these services.

The requirements for these loans are very simple. Lenders require the information about the first mortgage like balance and payment history. You can submit this information either by fax, in person or online via electronic mail.

Interest rates are not always what are advertised by the banks, mortgage brokerage or other lending institutions. So it is advisable to borrowers to carefully investigate about interest rates which they are going to have. Generally, credit score determines the interest rate of the borrowers. It is important for borrowers to check your credit report from all the three credit bureaus to see where is your credit score is standing. If you find any mistakes in your credit report then dispute them.

If your credit score is not as good as it should be then consider repairing it prior to applying for loan.
Inaccuracies on your credit report can ruin your financial position. Inaccuracies can lower your credit score. So it is better for you to correct these mistakes. After getting your credit report free from errors, request for quotes from the lenders.

It is not a wise practice to collect quotes from too many lenders and allow them to pull out your credit report. It is because you are already having bad credit and when different lenders will check your credit report your score will go down each time by 1 point. So make sure first you raise or repair your poor credit score.


Sometimes lenders hesitate to provide lower interest rates on bad credit home equity loans unless the borrower’s credit score becomes stable. In such situation, borrowers have to take quick credit raising measures. Calculation of card balance to limit ratio is the most effective and fastest method to raise your credit score to get your bad credit home equity loan application approved. If you find the ratio more than 20% then you can pay off the balances and it can raise your credit score to up to 30 points in as little as only a month. If you don’t have sufficient funds to pay off the balance then you should consider taking help from any of your fast friends or relatives. With he financial help from a relative or friend, you will be able to take out a lower interest bad credit home equity loan.

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Quick Home Equity Loans

Quick home equity loans have become a popular choice of individuals who want to fulfill major expenses carrying remarkable equity in their homes. These individuals use the equity on their homes to take out quick and easy cash without contacting bank. Some lending institutions are offering over 100% of the home value.


The biggest setback of the home equity loan is that if he borrower becomes default on payment, then they are likely to lose the ownership of their home. In addition to this, if you need to sell out your house before completely paying off the loan, then the amount comes out of the sale proceeds of your house.

Lenders only carry out a quick credit and title check to give the loan. Borrowers are required to charge the fee for the paperwork that is involved in the loan processing. The fee is usually reasonable. Other than that, there are no strict requirements to qualify for this loan. The loan approval is quick and money transfer is easy and fast as well. It is because you are putting your home to secure the loan so lenders don’t delay the approval process.

Normally individuals can seek two types of home equity loans.

The first one is quick home equity loan that can easily be obtained online via internet or by contacting any local lending office located within your area.

After signing a term agreement for the quick home equity loan, you receive a lump sum amount that you can use to make big purchases or for big expenses of certain type. This type of loans can be used for home improvements, motor vehicle purchase and to consolidate different debts.


The interest rates on these loans remain constant over the loan term due to which no changes occur in the payment structure. Loan repayment terms can be fixed for ten to thirty years. Applicants can quickly calculate the amount of loan the can take out along with the monthly payment and fees. This practice helps borrowers to understand their home equity loan easily. Online application also makes it the entire process of loan easier, as borrowers can get their home equity loan applications approved in quick time.

It is the second type of home equity loans. This type of home equity loan provides quick cash to the borrower on the basis of “as needed”. These loans can be used for improvements that are required to be made in home, for medical bills, and to invest in small business. Interest rates on these loans are changeable that are tied to the prime interest rate. If you are in need of urgent cash to fulfill various needs then this type of loan is the best option to do so. However, payments tend to change from one month to other due to balance flexibility. If it is acceptable for you then it is the right loan for your urgent financial needs.

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Mortgages and Negative Equity

Not so long ago the rules of buying a property were clearly defined. Mortgage banks set some pretty strong criteria which had to be strictly adhered to and there were no room for negotiation. Equity of a minimum of thirty percent was required on a property, and if you didn't have the thirty percent, you saved harder till you did. In the case of young couples who were buying their first home, it was fairly common practice for the bride's parents to pay a fairly large chunk of the deposit, with the groom's parents adding a little, and the young couple making up the balance. Sound idyllic? It was. For the simple reason, that then, which means up to fifteen years ago, property prices were realistic and an average family could afford to pay out the relatively small sums of money required to make the equity required to purchase a property.

However, as the property boom began to take of in the mid nineteen nineties, and property prices began to rise, it became increasingly difficult for buyers to raise the money required for equity. So what did the banks do? So anxious were they to sell mortgages and earn interest that they began to relax their restrictions on equity minimums. Fuelled by the seemingly never ending property boom, every year they demanded a little less equity, Not only that, the banks, so hungry were they to lend money and earn interest, were less than stringent in doing physical valuations on the properties that they were lending against. It seemed that no matter the state of the property, it would always rise in value. This was true, at least on paper, till the sub-prime mortgage crisis fell upon the World in the summer of 2007.

When the bubble burst, home owners were forced to wake up to the reality that their property values had dropped by ten per cent almost overnight and the predictions were that they could fall to as far as twenty five percent within the next few years. For veteran home owners, who had bought properties twenty or even ten years ago, and invested reasonable equities and seen their property rise to double in value, whilst it was upsetting it was by no means a disaster. Also for people who purchased a property five years ago or after, and had placed little or no equity into the property the situation is not easy, but is liveable with, at least in the short term. The people who appear to be hardest hit or those who bought properties in the early 2000s. Those who placed equity of between five to fifteen percent of the value of the property when they bought it.

Today their property is worth ten percent less, which means that they have lost whatever appreciation on the property value they earned, and are starting to dig into their equity. With property values continuing to fall the equation is that they will have lost all their equity and will actually owe more on their mortgage than the property is worth.

That is a classic case of negative equity and how innocent people who wanted to own their own properties and invested reasonable sums of their own probably hard earned money to do see the danger of having their equity wiped out. The best advice you can give to these people is to hang in, not to panic and in time their property value will return, and their equity will be saved. In may take time, but it will happen.

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S&P Equity Issues Semiconductor Predictions for 2011

S&P Equity Research semiconductor and semiconductor equipment analysts Clyde Montevirgen and Angelo Zino have issued their 2011 forecasts for the industry.

"The year 2010 is expected to close strong for the semiconductor and semiconductor equipment industries, as sales growth for both are forecasted to reach decade highs," said Mr. Montevirgen. "Consequently, we anticipate that most chip and equipment companies will experience multi-year high margins and exceptional earnings increases."  Added Mr. Zino, "While we think there is still some room to grow, we project more modest advances ahead."

Below, they list their forecasts for these industries for 2011.

We forecast that semiconductor industry sales will rise 7% in 2011. Considering recent forecasts from S&P Economics, research from industry and trade groups, and our bottom-up analysis of sales trends for the companies in our coverage universe, we see increasing unit shipments for key end-markets, such as computers, smartphones, and communications. We note these account for a large percentage of the semiconductor industry's demand. We expect industry sales to rise to nearly $320 billion in 2011 from an anticipated $299 billion in 2010. For 2011, semiconductor equipment sales growth should slow; we estimate that sales will rise less than 10%, after our projection for industry revenues to increase more than two-fold for 2010. Although the industry is experiencing a sharp rebound in sales this year, following an extended period of under-investing by semiconductor manufacturers, we forecast that growth will slow going forward, as companies digest recent capital expenditure purchases. We expect most demand for semiconductor equipment to come from more advanced technology nodes, as well as from larger memory customers and foundries looking to expand capacity. We project that capacity purchases will be driven by flash memory manufacturers, such as Toshiba and Samsung, given our expectation for stronger demand and tight supply in this sub-industry. We anticipate robust unit shipments for smartphones and tablets to be a major catalyst for these manufacturers, which should keep customer profitability at high levels. Unlike Dynamic Random Access
Memory (DRAM), which relies heavily on PC demand, the flash memory market depends on a number of different applications and looks to us to be in better shape than DRAM on a comparative basis. The flash memory industry has emerging technologies, such as solid-state drives (SSDs), which should drive new demand. We see DRAM segment sales declining in 2011, following our projection for a more than doubling in capital spending in 2010. We believe the biggest growth catalyst for the DRAM segment in 2010 has been the transition from DDR2 (double data rate) technology to DDR3 (both DDR2 and DDR3 are types of DRAM chips that are found in personal computers). DDR3 technology is the successor to DDR2 and offers advantages such as lower operating temperatures, greater speed, and reduced power consumption. Now that DDR3 has become mainstream, we do not see any major catalyst boosting segment spending in 2011. We forecast that the Asia-Pacific region will make up 55% of semiconductor sales by the end of 2011. We see more semiconductor companies trying to make cost structures more variable by outsourcing manufacturing to third-party foundries. Leading Taiwanese foundries, such as Taiwan Semiconductor manufacturing (TSM 12 ***), have invested heavily in sub 40-nanometer manufacturing processes, which we believe will attract chip companies that do not have the capital to invest in such high-end manufacturing technology. Also assuming softer sales growth and less favorable tax incentives in Europe, as austerity measures continue, we see Asia continuing to gain global share. We expect the semiconductor industry's plant utilization rate to be around 90% by the end of 2011. We think the capacity utilization rate will fall from the current mid-90% range to the mid-to-high 80% range early in 2011, as chipmakers allow excessive inventory in the supply chain to digest. Although we see increasing capacity from recent capital expenditures, we believe that seasonal strength and a rebound in end-market demand in the second half will help keep plants busy through the fourth quarter of 2011. We forecast that the semiconductor industry's gross margin will widen modestly throughout 2011. Considering our view that chipmakers will start the new year by burning off excessive inventory, we expect first-quarter gross margins in the low-50% range, given lower plant utilization rates. However, we think orders will return to more seasonal patterns starting in the second quarter, and we expect margins to expand to the mid-50% area by the end of the year. We see semiconductor equipment manufacturers moving further into higher-growth, adjacent industries, namely solar, given our view that the semi conductor equipment industry is in the midst of a long-term secular decline. We believe pursuing new growth avenues makes sense given the similar processes and technology used within both industries. In addition, the solar industry has higher growth opportunities versus the more mature semiconductor industry, in our view. We believe companies, both small and large, will be looking to enter the solar arena, whether organically or through merger and acquisition activity. We expect Advanced Energy Industries (AEIS 14 *****) and Varian Semiconductor Equipment Associates (VSEA 37 ****) to be major beneficiaries of this trend because of their high investment in R&D within this arena. We think the semiconductor equipment back-end industry (packaging and automatic test equipment) will experience pressure to consolidate, given the segment's lower growth rates, high fixed costs, and lower profitability relative to other areas of the supply chain. We believe further consolidation of test equipment companies would facilitate cost savings through economies of scale and drive more effective factory utilization. We think Intel (INTC 21 ****) will finally gain some traction in the handset and tablet markets. With Intel's proposed acquisition of Infineon's wireless business unit (expected in early 2011), we see Intel instantly becoming a formidable competitor in the baseband segment of the handset market. We think Intel will successfully be able to cross-sell its Atom processor with the baseband chips, and we expect even more progress once it creates a single chip solution that integrates both functions. Additionally, we believe that Atom will find some success in the lower-end segment of the tablet market.

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