Rocker By Baby

There has been over $1 trillion wrapped up in subprime loans over the last ten years, much of which has been written off as a loss. What most Americans do not know is that there is over $1.5 trillion tied up in "exotic" mortgage loans including Alt-A and Option ARMs. Many of these exotic mortgages are scheduled to reset in the next six to eighteen months and could cause a crisis even larger than that of the subprime crisis.

Many of the borrowers of "exotic" mortgages had the perception that the economy and their financial standing would get better before their rates reset. Sadly, the opposite is true on both of those fronts. The "exotic" mortgages offered very low rates for the first few years of the mortgage; many of them offering rates below 5%. The problem that will cause our next crisis is that many of these rates are going to jump over 8 or 9%. Many of the same people that desired a stronger financial life are going to see their savings crumble as their mortgage payments could increase as much as 50% due to the reset of their loan.

It is highly likely that we are getting close to the end of the subprime crisis which will greatly help the housing market. Hopefully, those who took out "exotic" mortgages will be able to afford the increased payments because if they cannot, we could see a problem even worse than the subprime crisis. Many of these borrowers are prime borrowers as well. It is quite unnerving to know that prime borrowers could very well start defaulting on their homes. Foreclosures will follow and it will be deju vu all over again, but even worse because the economy has been in a downward spiral for the last fifteen months.

For more information on the "exotic" mortgage crisis and mortgage news make sure to go to the the #1 Subprime Blog on the internet: Subprime Blogger. There are many articles to help you in your daily life to reduce to concern of mortgage rate payments, whether it be Subprime, exotic or prime.

A home equity loan allows you to cash-in on the equity you have built-up in your home. The funds you receive can be used for debt consolidation, home improvement, college education, investments or any purpose. With a home equity loan your home is used as collateral to secure the loan. If you default on the payment you can lose your home so it is important to insure that you can afford to take out the loan before you sign on the dotted line!

Many homeowners get a home equity loan to consolidate bills. This can be a great strategy if you are overburdened with high interest credit card and/or consumers loan debt. A home equity loan can usually be obtained at a lower rate and all or a portion of the interest you pay on the loan may be tax deductible. If you are considering a home equity loan to consolidate your debt it will be wise to cut up your credit cards and close out the accounts. The last thing you want is to take cash-out of your home and end up back where you started from because you did not have the discipline to stop using your credit cards!

A home equity loan can also be a great source for obtaining cash to make home improvements. Next to debt consolidation, home improvements are the 2nd most widely used reason that consumers obtain home equity loans. Depending on what kind of home improvements you are making, it can increase the value of your home which may help to justify the added monthly payment expense you incur when you obtain a home equity loan.

A home equity loan can either be in the form of a fixed-rate loan or an adjustable-rate line of credit. With a fixed-rate home equity loan you receive all of your money in one lump sum and the amount of your monthly payment is the same for the duration of the loan term. With an adjustable-rate home equity line of credit you are approved for a credit line amount in which you can draw from as needed. In most cases you will only pay interest on the outstanding amount and your interest rate is subject to change. As such your monthly payments may vary depending on the outstanding loan amount and interest rate in any given month.

There are many home equity loan lenders online who will lend to people with good or bad credit. You may want to compare the rates and programs of several lenders before making your decision to increase your chance of getting the best possible deal. Also, consult with your tax advisor to see how much of your home equity loan interest will be tax deductible.

Levetta Rivera is a successful mortgage broker, author and webmaster of several financial websites specializing in home equity and mortgage loans for good and bad credit. For more information on mortgage or home equity loans or to compare rates and programs of home loan lenders visit: http://www.equityloansource.com or http://www.badcreditloanshop.com