A 125% home equity loan, also called to as a no equity second mortgage, are available for first time homeowners who don't have any equity in their home. This 2nd mortgage product allows offers an additional 25% above the appraised value of your home. People who just began unpacking can take advantage of the 125% equity loan for financing home improvements or consolidating bills.

Home equity lenders usually use a drive by appraisal for equity loans, so the loan process can be quick. For borrowers who have owned their house for less than 1 year, the purchase price listed on the HUD-1 statement can be used rather than getting a formal appraisal.

A 125% second mortgage can provide the money you may need, but you need to understand that you are using your home for security. If you plan on moving in the next year then this loan may not be for you.

Since there is no equity used for qualifying the interest rate are typically a few percentage points higher than traditional home equity loans. In most cases, the home equity loan rates are based on your fico score and residual income. These no equity 2nd mortgages have become very popular with people who have accumulated a lot of credit card debt. The 125% home loan can save you money if you use the cash to pay off bills.

Keith Hinkley is a business owner from Manhattan Beach, California who loves to share his finance experience by publishing articles for banking institutions across the country. You can get more of Keith's "2 cents" if you go down to Marine st. or read his posted articles online. Visit these loan sources for more loan information about 125% Home Equity Loans and debt consolidation loans. For current home equity loan rates online, visit the Home Equity Loan Center.

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