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Don’t Want To Refinance Your Current Mortgage But Need Some Cash? Consider A Home Equity Line Of Credit!
By: John R. Blakefield
A home equity line of credit is becoming a more popular option among home owners
who don't want to refinance or take out a second mortgage. A home equity line of
credit is like a second mortgage, in that you use your property as collateral
for the equity you have built in your home. However, instead of getting a lump
sum of cash, you can draw out money as you need or see fit. You can control how
much money you take out, based on what is available.
Like a credit card, you will be approved for a specific amount of credit and
have a limit as to how much you can take out at a single time. Some lenders will
actually set your limit to 85% of what your property is worth, minus what you
owe on your first mortgage. This of course depends on your credit history, total
debt, and payment history.
When considering a home equity line of credit you must ask and compare the
following facts so the loan is tailored to your needs. Be sure to ask the lender
about the life term of the loan, if there is minimum withdrawal requirement when
you first open your account, and if there is a maximum or minimum withdrawal
requirement every time you take out money.
You also need to know how you access your credit, whether it is through credit
card, checks, or both. There may also be a draw period, or a fixed time that you
can withdraw from your credit. A draw period can effect when you can take out
money and if you can renew your credit line when this draw period is up.
Just as any loan, you must compare interest rates, whether it is fixed or
adjustable. Balloon rates are popular with home equity lines, which are loans
that are paid in a single large payment at the end of the life of the loan. Or,
you may find a loan with no balloons but a higher monthly payment.
You also may find most loans have large one-time upfront fees, others have
closing costs, and some have continuing costs, such as annual fees. All of these
things will impact the amount of money you will have to dish out simply for
financing the loan, not including paying back the money borrowed.
There are many options to consider when wanting to get money. Perhaps a loan
that uses your home as collateral is not what you are looking for. After all,
with a first mortgage, maybe even a second mortgage and then a home equity line,
you are making yourself liable to a huge financial obligation! If any of these
responsibilities were to falter due to too much risk, and not enough money to
pay, you could end up losing your home because the loans use your home as
collateral.
You may want to explore borrowing from credit lines that do not use your home as
collateral. You can entertain credit cards or unsecured credit lines that let
you write checks as you need the money. There are also options as such as loans
for specific items, such as cars or tuition. These options may be less risky and
more suitable for your situation.
When considering a home equity line of credit or other form of loan, be sure to
ask the lender about every detail of the terms of the loan. There are many
options for you to entertain from many different lenders. You can definitely
find a loan that perfectly fits your financial information. It will take some
shopping and effort, but it will save you money in the long term.
About the Author:
John R Blakefield is a mortgage and real estate specialist. For more
information, articles, news, tools and valuable resources on home mortgages or
investment loans, refinancing, debt solutions, visit this site: http://www.scourtheweb.com/mortgage/.
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