The loans generally referred to as equity loans are junior loans or second mortgages. These loans usually have adjustable interest rates, are secured by the borrower's equity in the property, and are amortized over fixed periods of time.

A popular type of junior or secondary loan provided by on-line lenders is a home equity line of credit. This line of credit is an extension of open credit up to certain agreed limits, secured by a second mortgage on the home. The borrower simply writes checks against the credit line and pays interest on only that amount of credit actually used. Security is provided by the owner's equity in the property. You will usually pay higher rates on your home equity line of credit because of the secondary position to your other home mortgages.

If you are looking to improve your home, you can save money by taking out a home equity line of credit, rather than a home equity loan. You will save interest payments by paying for your home improvement expenses as they occur rather than receiving all of your improvement funds at the beginning of your home improvement project.

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Before you buy an investment property it is critical that you create your own projection of the property's profitability. Real-Estate-Proforma.com has a quick-proforma with which you can calculate real estate financial statistics such as Internal Rate of Return, Capitalization Rate, Cash-on-Cash, Debt Multiplier, Loan-to -Value Ratio, Debt Coverage Ratio, and Mortgage Payments. You can use this JavaScript proforma to project the profitability of a real estate project. By becoming a member you will receive access to a number of Excel real estate proformas. membership | services

If you are analyzing another person's proforma, or you are examining a prospectus for a real estate deal, it is very important that you read the document carefully and determine how the values of the financial statistics above are being calculated. For instance, values such as the Cap Rate may be determined from overly optimistic projections of the future rental income of a property.

You can "reverse engineer" the financial projections you receive from a prospectus and/or request the Excel (or other type of) spreadsheet a developer used to create their proforma. A very useful Excel or Visual Basic macro used to check Excel formulas is available in the spreadsheet below for download. Download Mortgage Formula Excel Spreadsheet

The due-diligence you do on a potential investment may uncover a number of potential problems with a real estate deal and we suggest you research each real estate investment very carefully. There are a variety of real estate financial consultants who can help with this, but if you are like many Real-Estate-Proforma.com members, you can or are learning to do your own due-diligence.

We hope you become a more successful real estate investor by using this site! membership | services