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Business Real Estate Deciding Between a Home Equity Loan and Home Equity Line of Credit
Business Real Estate Deciding Between a Home Equity Loan and Home Equity Line of Credit
| Deciding Between a Home Equity Loan and Home Equity Line of Credit |
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| Written by John Gaddy |
| Tuesday, 05 January 2010 08:13 |
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Home equity loans and lines of credit are powerful tools that give homeowners simplified access to cash to use however they wish. Although alot alike, there are several key items that differentiate these home equity products. Make sure you clearly understand both products before tapping into your home's equity for home improvement, purchase of a new car, etc.. Home market values are in a constant state of flux. The difference between a home's market value and any outstanding mortgage(s) equals the available equity. For example, if a home's value is estimated at $280,000, and you owe a mortgage lender $180,000, the available home equity equals $100,000. With either a home equity loan or line of credit, the homebuyer may choose to access all, or part of the home's equity. Benefits of a Home Equity Loan Home equity loans are similar to other types of personal loans. In most cases, personal loans are secured with some piece of property that has inherit value as collateral. With a home equity product, your house is the collateral. Most home equity loans come with fixed rates and payments are usually amortized over 15 years. The homeowner receives the funds in a lump sum and after closing the funds can be used for any purpose. As with most loan products, the homeowner can decide to pay the loan quicker than the amortization period. Benefits of a Home Equity Line of Credit? As with home equity loans, lines of credit are also based on the home's available equity. However, instead of funds being supplied in a lump sum, credit lines are essentially revolving credit accounts. For example, if approved for a $150,000 credit line, a revolving credit account is established for this amount, and homeowners are free to withdraw funds up to this limit as necessary. Lines of credit are similar to credit card cash advances. However, the rates are much more favorable. Once money is withdrawn, payoff must be completed with 10 years normally. Since line of credit rates are variable (using some factor of either the prime rate or LIBOR), payment amounts can and do change. About the Author: If you're in the market for a home equity loans or home equity line of credit Easy-Home-Equity-Loans.com can assist. Check out our site for current rates, assistful commentary and tips on securing the best home equity product for your needs. Kindly provided by MoneyHunter.org You are welcome to use this article on your own website, if you include the link just before this text. |
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