Cash Fact

Home equity loans have become one of the most popular fund raising options for individuals.

Home equity loans are the loans taken using your home’s equity as the collateral. Thus they are a type of secured loan.

These loans are based on two facts – first, that you have repaid a certain portion of the home mortgage and thus should be able to reutilize that equity; and second that the value of your home has increased since you first purchased it.

The common reasons for taking an equity loan are home improvements, educational expenses, medical bills, debt consolidation etc. There are usually no restrictions on how the borrowed money is used.

The interest paid on such loans is usually tax deductible. Also the interest rates on them are lower than credit card other type of consumer loans. (They are higher than the first mortgage.)

Let’s understand what “home equity” is.

Home equity is defined as the difference between the market value of your home and how much you owe on the mortgage (or mortgages in case you have more than one.)

The market value of your home will be determined by bank’s appraiser or a licensed appraiser.

Suppose market value of your home is $ 100,000 and you have made a down payment of $ 10,000.

Then your equity

= market value – amount owed

= $ 100,000 – $ 90,000

= $ 10,000

After three years if you have paid back $15,000 more of the debt, you will still have $75,000 of the debt left. However after three years the market value of your home would have increased to $ 150,000.

Thus your equity after three years would be

Market value – amount owed

=$ 150,000 – $ 75,000

=$ 75,000

Besides home equity loans (fixed rate home equity loans), there is another type of home equity debt – home equity line of credit or HELOC.

Both of them are known as “Second Mortgages” as they are secured by your home just like the first mortgage.

“Second Mortgages” are repaid sooner than the first mortgages, which are usually repaid in thirty years. Home equity loans usually have a time frame of five to fifteen years.

Home equity loans are a one time lump sum loans, that are repaid over a time period decided beforehand.

On the other hand, home equity line of credit or HELOC allows you to borrow up to a certain limit for the period of the loan. The time limit of the loan is set by the lender. You can withdraw money any time during the time period and repay it any time. It works the same way like a secured credit card.

A HELOC has a variable interest rate that varies through out the period of the loan. The HELOC interest rate depends on the prime lending rate (prime lending rates are fixed by the federal reserve in the US.) The payments can vary depending on what is the amount that has been borrowed, the interest rates and whether the loan is in the draw period or the repayment period.

The credit rating of the borrower is also a factor in deciding the home equity loan interest rates.

The draw period of the line of credit is the period during which you can borrow any amount up to the limit specified by the lender. Also only the interest has to be paid during this period; however you may choose to repay the principal amount if you wish.

During the repayment period, no new debt can be taken and the existing debt must be paid back.

Usually draw periods are for ten years and repayment periods around fifteen years, but this varies depending on the lender’s policies.

Withdrawals for HELOC can be done by checks, credit cards or EFT. Lenders may have certain terms which make require you to take an initial advance when the HELOC is setup, borrow a minimum amount each time you use it and keep a minimum outstanding balance.

If you decide to sell off your home, you have to pay back full amount of the home equity loan.

Our city yearly puts on a western-themed parade, chili cook-off, rodeo and carnival to raise funds for the local charities. However, over the years our demographics have changed from semi-rural to a more urban, affluent constituency.
Consequently the yearly fund raiser has sufferd from lack of interest and has lost money for the past five years. What alternative functions have your cities found to be profitable?
I should add that the yearly expenses for these functions are above $800,000, so we’re looking for an event, or events, that will bring in around $1,000,000 or more.

Jet Airways and Kingfisher Airlines, the other private full-service carrier in the country, badly require an equity infusion to remain afloat, said an aviation analyst requesting anonymity.

Jet Airways is yet to decide on the fund-raising instrument. As reported, the company has sought the government’s permission to sell shares to overseas investors as it may be hard to raise 400 million Dollars from domestic investors alone.

Any share sale will result in dilution of shareholding of the promoters who hold 80 percent in the company. The Jet Airways stock slipped 0.35 percent to close at Rs 311 on BSE.

The domestic aviation industry has been badly hit by surging crude oil prices last calendar year, which touched a high of 147 Dollars per barrel in September last year. With economic slowdown making people go for cheaper options, full-service airlines have been forced to keep their fares very low to check travellers from moving to low-cost carriers. In the process, they are piling up losses, while budget carriers such as IndiGo and SpiceJet are making money. Jet Airways suffered a net loss of Rs 225 crore for the quarter ended June 30, 2009, on a total income of Rs 2,428 crore. It posted highest-ever loss of Rs 961 crore in the year ended March 31, 2009.

Jet Airways will launch its second daily flight to Hong Kong from India on September 30, with daily services on the Delhi-Hong Kong sector.

Jet Airways has rescheduled its Delhi-Patna-Delhi flight with effect from October 1. The flight would now take off from Delhi at 6.40 pm and reach Patna at 8.15 pm.

On its return journey from Patna, the flight would leave at 8.50 pm and reach Delhi at 10.15 pm, airlines sources said. At present the flight leaves Patna at 9.30 pm

I am doing a bake sale and garage sale already to assist with my fund raising so I can walk in a local 3 day 50 mile walk for Multiple Sclerosis Society.

I am also making really cute awareness bracelets. Any other ideas?

Developing Hands Fund Raising Dinner This fund raising dinner is organized by Developing Hands to build a school for homeless ,street children & orphans.

Ile Oloke Meje ( fund raising)

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I am going to Peru next summer for a youth group called AYS for humanitarian projects. I need some ideas for fund raising to raise money for it. Please comment! Any idea will help!!

Chamber of Commerce takes over Half-Marathon and 5K road race
WILMINGTON – For five years serious runners from across the region have joined locals in a road race through town that builds community spirit while raising money for scholarships. This year it comes under new management by the Wilmington Chamber of Commerce and promises a great experience for anyone that wants to get involved.

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Children sell lemonade to help other children with cancer
DALLAS – How does refreshing lemonade sound on a hot day like today? There’s a fund-raising effort under way in Dallas this Thursday. Some kids are raising money for a good cause by selling lemonade at the 4100 block of Illinois Avenue. They are raising money in memory of a special little girl, Alex Scott. She died at the age of eight in 2004 after a lifelong battle with cancer. When she was …

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