[Blog Main Page]  [Log in]  [RSS]                           

There might be various reasons for you to tap into your home equity. While some people borrow against their home equity in order to replace a high-interest credit card debt with low-interest home loan, there are others who use their home equity to fund home improvements. Then there are people who just feel more secure when they have an easily accessible line of credit. So, you might either go for a home equity loan (also abbreviated as HEL) or a home equity line of credit (HELOC).

Choosing between a HEL and a HELOC:

If you are looking to payoff high-interest credit card debt, you would want a lump sum amount right away. A home equity loan would be more suited to you in such a case. The home equity loan rate is much lower than the credit card interest rate (and so is the HELOC rate); but since you are looking for a lump sum amount, a HEL would be more suited.
(read more…)

If you are struggling with credit card debt, your home could be your savior. A home equity loan can help you pay off the expensive credit card debt. A home equity loan is a loan that is secured against the equity (the extent of ownership) you have in your home. Since the home equity loan interest is much lower than the credit card APRs, it makes a lot of sense to use home equity loans for paying off credit cards.

So, here is a 3-step guide on how to pay off credit card debt using home equity loan:
(read more…)

This article aims to inform on how a Home Equity Line of Credit (HELOC) works. A HELOC is essentially a loan against your property; but you do don’t get all the money at one time as you would with a home loan. You are released certain amounts as and when you need them. It’s a line of credit, something like a credit card. A HELOC will let you avail money equivalent to 80% of your property value. The amount can go up to 125% of the property value when the real estate market is strong.

HELOCs are offered by banks and mortgage lending institutions. The terms of a line of credit will depend upon any existing mortgages that you have and the equity that you have in your property. A HELOC may require you bear the cost of application fees and appraisal costs. Any other expenses will be deducted from the loan amount. Once the loan is closed you get a checkbook that you can use to access the loan amount as and when the need arises. You may also be given a debit card for use; be careful and keep the card secure.
(read more…)

When deciding between a Home Equity Loan against a Home Equity Line of Credit, first we need to determine what the money is being used for and how much money are we going to need. Generally, a HELOC (Home Equity Line of Credit) is a better choice for ongoing cash needs, such as college tuition payments or medical bills.

These are recurring debts. When you need a set amount of money for a specific, one-time purpose, such as buying a car or a major home renovation, then you want to consider a HEL (Home Equity Loan).

(read more…)

9 Comments

Many people have heard about an equity loan called a Home Equity Line of Credit but are not really clear about what they are. They are a very common and popular type of loan than allows homeowners to draw on the growth in their homes and are usually referred to as a HELOC. A HELOC can give people the flexibility and convenience that is similar to a credit card account, but with much lower interest rates.

While a HELOC can be considered a type of home equity loan, it does have some unique features that make it a bit different. They also have some specific benefits that often make it the most attractive form of financing for people who have some growth in their homes.

Home equity is the value of the “unencumbered” portion of a homeowner’s property. In simple terms, it is the difference between the fair market value of your home and the balance of any mortgages that have been taken out against the home. If you have a home with a fair market value of $220,000 and the balance of all your mortgage loans is $120,000 in total, then you have a home equity value of $100,000 that you can borrow against to take out a borrowing off your house. (read more…)

10 Comments

Among the most economical lending solution available today are home equity loans and home equity lines of credit. Depending on your personal financial situation, some of the interest can be used as a tax deduction. They are generally flexible and generally offer you the best rates available. There are a lot of advantages to a home equity loan. However, be sure to refinance with extreme caution.

There are two different types of home equity loans. The actual loan usually has a fixed rate with a precise period of time in which the loan needs to be paid off. Also fixed is the payment. This type of loan is ideal for someone who has a precise amount in mind. When consolidating your debts, such as student loans, credit cards, car loans or doing some home improvements, a homeowner will obtain a home equity loan to consolidate their entire payments inro one easy to pay bill. Often times, this creates a lower overall monthly payment.

A more flexible option is a home equity line of credit. This is an open ended loan meaning the payment and rate usually tends to be lower and is variable. A line of credit is generally used like a credit card, with tax benefits. Interest is only paid on the portion of the line you use. The rest is available for when and if you need it. Whenever you make a payment, that portion that is applied to the principle and is then available to use again if need be. Some lenders will offer a card for easier access. This option is great for when you do need to use the money immediately or would like to have the flexibility to keep using the money without going through the loan process over and over again. (read more…)