A home equity loan is easier to and comes at a lower interest rate than other forms of credit; plus it can save you money at tax time.
Home equity loans remain a preferred source of consumer credit. Home equity loans can give you a lump sum of cash at relatively low interest rates, along with certain tax advantages not available with other kinds of borrowing.
Some home equity loans come with low introductory rates and variable interest; others come with fixed rates. Some loans have balloon payments at the end of the term as a way to keep the monthly payments lower.
The Right Time For A Home Equity Loan
A home equity loan makes financial sense when,
- you can pay off high-interest debts like credit cards, car loans or medical expenses with home equity refinancing that's not subject to rising interest rates.
- there is enough equity built up in your house so you can borrow less than 80% of the home's value. This means you won't have to pay Private Mortgage Insurance.
- you won't be moving anytime in the next few years. That way the loan expenses—closing costs, loan fees, discount points—on the new mortgage will be paid back cost-effectively.
- interest rates are a percentage point or more below what you are currently paying on your mortgage.
you want the convenience of consolidating your bills into a single monthly payment with a fixed repayment term.
Anytime you get a loan using your principal residence to guarantee repayment, federal credit law gives you three days to reconsider a signed credit agreement and cancel the deal without penalty. This "right to rescind" is guaranteed by the Truth In Lending Act. You have until midnight of the third business day to cancel the credit transaction.
You can learn how to avoid Home Equity Loan scams, plus get a free quote at Easy Mortgage Refinancing.This is a no-risk way to see how much you might be qualified to borrow with a home equity loan.
Mike Hamel is the author of three business books and several articles about mortgage financing. His material is featured on sites like Easy Mortgage Refinancing.
With literally hundreds of credit cards at your disposable, choosing the one that's right for your lifestyle can be a daunting task. You always want to ensure you get a credit card that meets your needs while offering the best rates and the biggest rewards. You can search dozens of local banks and lending institutions, scour the internet, or randomly select a credit card OR you can use our convenient online credit card comparison tool to find exactly the card that's best for you. Our credit card comparison tool will allow you to view credit card details side-by-side in an easy to understand cross grid. You can even select a card and approve online, in some cases being approved within minutes of submission! It truly is the smart way to shop for credit cards!
Print this page
