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Home Equity Line Of Credit – Great Idea For Rainy Day Emergencies
By: Charles Essmeier
Most Americans tend to live on a paycheck-to-paycheck basis, and the typical
household has nearly $10,000 in credit card debt. Adding to that is the fact
that Americans are saving money at the lowest rate in history. We spend what we
earn, when we earn it, and there’s little or nothing available when a disaster
or an emergency strikes. How can the average American make sure there will be
money available for that “rainy day” emergency?
One possible solution would be to open a home equity line of credit. The equity
in a home is the difference between the value of the home in the market and the
amount owed on the mortgage. Rising real estate prices across the country have
left Americans with record amounts of home equity, and record numbers of
homeowners are borrowing against the equity in their home. There are two main
types of home equity loans; the traditional loan and the line of credit. The
traditional loan lends a fixed amount of money that is repaid at a fixed
interest rate over a fixed amount of time. This is ideal when the money is
borrowed for a specific purpose, such as a home-remodeling project.
The home equity line of credit, on the other hand, gives the borrower great
flexibility. The amount of money is capped at a certain amount, but the borrower
writes checks to use the money when they need it. The borrower only makes
payments when he or she actually writes a check to use some of the money, and
the interest rate on the loan is adjustable. The line of credit is the perfect
source of funds for that “rainy day” emergency. The costs of obtaining a line of
credit are minimal, and the paperwork is much less involved than the paperwork
associated with obtaining a primary mortgage. The beauty of a line of credit is
that there are no additional costs if the money isn’t used. The homeowner is
under no obligation to use any of the money, but he or she can simply sleep
soundly, knowing that it is available should an emergency arise in the future.
Americans, as a group, tend not to save much of what they earn. But even poor
savers who own their own homes can prepare themselves for unexpected financial
emergencies by taking out a home equity line of credit. One never knows when an
emergency will strike, but it is always a good idea to be prepared to face one.
About the Author:
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro
Marketing, a firm devoted to informational Websites, including
http://www.End-Your-Debt.com ,
a Website devoted to debt consolidation information and
http://www.HomeEquityHelp.net , a site devoted to information on home equity loans.
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