Home Equity Loans - the Pros
If you take out a home equity loan, there are several advantages, but none more evident than being able to use it for any purpose you have in mind, may it be paying off debts, taking the family on vacation, going to college or paying for your child's college tuition, emergency funds, etc.
Typically, the interest rates of home equity loans are not as high as those on other types of loans or credit cards. Another advantage associated with home equity loan interest rates is that it is tax deductible up to the equity value in your home or up to $100,000 - whichever is less. (Bonus fact - The tax-deductible portion would connected to a percentage.)
Home equity loans are also quite flexible, in the sense that it allows you to choose when to use the money, and you may be able to decide when to repay the principal.
Home Equity Loans - the Cons
You may risk losing your home with a home equity loan if you can't repay or refinance the loan, since your home is the collateral for the home equity loan, similar to an additional mortgage on your home. Usually, foreclosures are held within 60 to 90 days of a payment that is missed or delayed.
For people experiencing career changes, home equity loan can also been an advantage, putting your home at risk. In the event your home's value would fall, then the chances of owing more debt on your property than its true worth are quite formidable.
Your home equity loan interest rate would also be greatly determined by fluctuations in the economy, so there would be no permanency to your monthly payments. So, it's important to know the cap on the home equity loan's interest rate, which determines how high your interest rate can increase each year, or over the whole loan time period.
Home equity loan lenders can charge several types of fees such as application, origination, and withdrawal fees.
Quick Pointers for People Interested in Applying for Home Equity Loans
If you are a person who wants to reap the benefits over the long term from a lump sum worth of cash, then home equity loans would be advisable.
Home equity lines of credit are different as they would be better suited for people who want to focus on short-term benefits.
When considering home equity loans as means to consolidate debt, pan on the long-term effects.
Ascertain whether your needs would be met by a home equity loan of any type, and always weigh the pros versus the cons before deciding.
Compare between different lenders and take into consideration the fees (both primary and miscellaneous), interest rates, loan amounts and the terms of the repayment, among others.
Read the contract thoroughly -- especially the fine print.
One word for anybody considering the offer of using a credit card so it would be much easier to use your loan -- don't.
Set up a systematic repayment schedule, and remember that it's best to pay more than the minimum required.
If you take out a home equity loan, there are several advantages, but none more evident than being able to use it for any purpose you have in mind, may it be paying off debts, taking the family on vacation, going to college or paying for your child's college tuition, emergency funds, etc.
Typically, the interest rates of home equity loans are not as high as those on other types of loans or credit cards. Another advantage associated with home equity loan interest rates is that it is tax deductible up to the equity value in your home or up to $100,000 - whichever is less. (Bonus fact - The tax-deductible portion would connected to a percentage.)
Home equity loans are also quite flexible, in the sense that it allows you to choose when to use the money, and you may be able to decide when to repay the principal.
Home Equity Loans - the Cons
You may risk losing your home with a home equity loan if you can't repay or refinance the loan, since your home is the collateral for the home equity loan, similar to an additional mortgage on your home. Usually, foreclosures are held within 60 to 90 days of a payment that is missed or delayed.
For people experiencing career changes, home equity loan can also been an advantage, putting your home at risk. In the event your home's value would fall, then the chances of owing more debt on your property than its true worth are quite formidable.
Your home equity loan interest rate would also be greatly determined by fluctuations in the economy, so there would be no permanency to your monthly payments. So, it's important to know the cap on the home equity loan's interest rate, which determines how high your interest rate can increase each year, or over the whole loan time period.
Home equity loan lenders can charge several types of fees such as application, origination, and withdrawal fees.
Quick Pointers for People Interested in Applying for Home Equity Loans
If you are a person who wants to reap the benefits over the long term from a lump sum worth of cash, then home equity loans would be advisable.
Home equity lines of credit are different as they would be better suited for people who want to focus on short-term benefits.
When considering home equity loans as means to consolidate debt, pan on the long-term effects.
Ascertain whether your needs would be met by a home equity loan of any type, and always weigh the pros versus the cons before deciding.
Compare between different lenders and take into consideration the fees (both primary and miscellaneous), interest rates, loan amounts and the terms of the repayment, among others.
Read the contract thoroughly -- especially the fine print.
One word for anybody considering the offer of using a credit card so it would be much easier to use your loan -- don't.
Set up a systematic repayment schedule, and remember that it's best to pay more than the minimum required.
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