Do you own a house? If so, you already have realized the
Greatest American Dream, which many of us continue to work hard
to have. Additionally, because you already have a house, you
already have easy access to money through Home Equity Loan or
Home Equity Line Credit.
It is thus easier for you to acquire funds for myriad of
reasons. Lenders can provide you a credit of up to 75% of your
total equity.
Funding children's college education or renovations for your
house or even for purposes of paying off the entire balance of
your primary mortgage may be available through home equity loan
or line of credit.
You may even opt to consolidate your debt, like your credit
cards and other unsecured credits with the options available in
a home equity loan or line of credit.
This facility is getting to be very popular nowadays because of
the convenience of owing only one institution and the added
advantage of lower interest rates. In addition, interests in
consumer loans like your home equity loan or line of credit is
tax deductible.
The facility of acquiring loan through home equity loan or line
of credit is flexible in various payments terms depending on the
institution that is providing you with the loan.
All of these flexibility and advantages of acquiring a home
equity loan and line of credit notwithstanding needs some
intelligent decision-making. This is because even with the
numerous advantages available in a home equity loan or line of
credit, the only one and most important factor to consider is
the fact that you put your house as collateral.
Consequently, failing to pay your debt may cause you to loose
the most precious asset you have, your home.
For this reason, before you embark on the convenient way of
acquiring a loan through home equity loan or line of credit, you
may need to consider if you really need this facility.
There may be other loan facilities available where you can
choose from, thus you may not need to put your house as
collateral. However, admittedly considering taxes and interest
rates may lead you back to home equity loan or line of credit.
In this case, you may need to seek additional advice.
I have been mentioning home equity loan or line of credit. This
is because the two differ in one most significant factor. Home
equity loan is a facility where you get the proceeds of your
loan lump sum. On the other hand, home equity line of credit is
a facility where you have a credit line, just like in a credit
card, where you may opt to get funds only when you need it.
However, in a home equity loan, you pay equal installments
throughout the duration of the paying period and you pay part
interest and part principal loan. In the case of home equity
line of credit, the interest rates are variable and you may
choose to pay interest only.
The negative side of this is that you need to pay a balloon
payment at the end of the term, which may be hard for you if you
are not ready to pay such a huge amount. You may end up taking
another loan, which will put you at a disadvantageous position
later on.
Finally, financial experts recommend that before you embark on
acquiring a home equity loan or line of credit, you may need to
do your homework by shopping around for the best terms, payment
options, and conditions where the lender may consider you in
default. Analyzing your needs may be an additional advantage for
you to make the intelligent decision.
For additional information and advice, you may refer to various
financial management websites before you decide if home equity
loan or line of credit is good for you. You may find other loan
facilities that will not be as risky, but understanding what you
need and how you need it may be necessary.
About the author:
About the Author: Hans Hasselfors is the founder of
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