Whenever you’re thinking about taking out any home equity lines of credit on your property, you will need to consider your options prior to cashing out the equity in your home.
If you use any of the home equity lines of credit available to you wisely then they can be an affordable way to borrow for education, repairs, home remodeling or debt consolidation. Here are a few tips to assist you in deciding if home equity lines of credit might be what you’re looking for.
A home equity mortgage loan on your home is an open-end line of credit not unlike a credit card that is tied to the equity in your property. When you borrow against your credit line your payments are based on the monthly balance.
If you never use any of credit line, you’ll never have any payments unless your mortgage lender charges you an annual fee. You should inquire about this before signing and avoid mortgage lenders who do charge an annual fee.
The advantage of equity lines of credit over credit cards is you will almost certainly receive a lower interest rate on a HELOC (Home Equity Line of Credit) because it’s secured by your house.
Unsecured credit lines such as credit cards have much higher rates of interest and fees generally. Your equity line comes with a debit card and checks for easy access to your money when ever needed.
The disadvantage of getting home equity lines of credit against your home is that it can be way to easy to access and thus eay to spend. This could tempt you into buying things you may not otherwise have made.
One last advantage over credit cards is the interest you pay on a home equity line can be deducted from your federal income tax.