If you are thinking of lending money or borrowing it, it is important that you know in depth what home equity loans are.
Home equity loans
Home equity loans are those that guarantee the fulfillment of a loan payment or that of credit through a mortgage, that is, of a property that is placed as a guarantee of the payment of a debt. For example, who requests a loan can put his house in guarantee, and who lends the money can be charged with said property in case the borrower does not fulfill his obligation.
Home equity loans have many advantages
The lender is reassured to know that in an extreme case he can recover his money, and whoever receives the loan can access significant amounts, thanks to the value of the property that he presents as a mortgage guarantee.
From the perspective of the borrower, that is, from whom the loan is requested, important aspects such as the repayment term, commissions, interest rate and any other expenses that may arise from the loan application must be observed, since they are aspects fundamental to review before placing a property as a mortgage guarantee.
For its part, the lender must ensure that the good to be mortgaged is in order and has no debts or a previous mortgage that is not yet paid. That is, you must carry out a feasibility study of the operation. Both parties must also ensure that the appraisal of the property is adequate since, from the value that emerges from this type of analysis, the maximum amount to be lent and received can be determined.
How to value a property
To value a property, aspects such as location, age, characteristics, conditions, that all papers are in order, among others, are taken into account. The valuation of a property for mortgage guarantee must be carried out by a professional appraiser who has the necessary accreditations for it. These accreditations are granted by different national and foreign institutions, such as the College of Engineers, the Autonomous University of Mexico, Puebla, American Society of Appraisers, Appraisal Institute, among others.
When the home equity loan has met all the requirements, the loan is approved and the corresponding contract is signed which, among other things, allows the lender to make use of the property in mortgage security in case it falls into debt, and It establishes the conditions under which the borrower must pay his debt, in order to guarantee that at the end of it he will recover all the rights to his property. In this way, both parties will be calm.