Why Do A Home Equity Line Of Credit?
Need money for education costs? Need to buy a car? Want to put an in-law suite onto your home? Whatever the reason, you need a large sum of money in a short time frame, right? Well, forget about costly things like personal loans and high-interest credit cards. When you’re a homeowner there’s no need to take on borrowing methods that are only going to cost you more in the long run. A home equity line of credit is just one of the options available to you, and many homeowners just like you are finding that HELOCs are the way to go.
A home equity line of credit, or HELOC as they’re often called, is like a credit card that uses the value you have already invested in your house. This option, for access to cash, is appealing to many homebuyers. Let’s say your home is worth $200,000 and the total amount left on your mortgage is $120,000, you have the potential to borrow $80,000 in a home equity line of credit. But, most banks will only give you a portion of that potential equity about. That portion is usually around 80%. Also, home equity lines of credit frequently allow the borrower more flexibility in the timeline of the repayment.
Many people ask what is the difference between a home equity line of credit and credit cards? Home equity lines of credit offer much, much, much lower interest rates. And, interest is only accrued on what you borrow. So, you can take out the line of credit and not use it until you need to whereas many credit cards charge you fees for the card. Some credit cards even charge you fees for not using them. But, home equity lines of credit can have changing interest rates.
Many people also ask what the differences are between home equity loans and home equity lines of credit? Home equity loans are what many people also call a second mortgage. The loan term for the home equity loan is fixed, and you receive the full amount all at once. For, the home equity line of credit, you do not have to take out the entire sum you are approved for. You can use it bit by bit like you would use a credit card. In addition to that, you can also use a little or use a lot. Whatever you don’t use will remain in your line of credit and remember, there’s no interest or fees being charged on it if you don’t use it.
In closing, you should also look into the costs associated with taking out a home equity line of credit. There can be application fees, appraisal fees, closing costs and sometimes points. All of these things should be discussed with you mortgage company before you take out the line of credit. And, also discuss the pitfalls. The banks are usually more than willing to discuss all of the terms of the line of credit. Ask lots of questions and do lots of research!
For more information on <a href=” http://www.canadianmortgagesinc.ca/home_equity_loans/”>Home equity loan </a> and <a href=” http://www.canadianmortgagesinc.ca/home_equity_loans/line_of_credit.html”> home equity line of credit</a>, visit most trusted and experienced mortgage broker at www.canadianmortgageinc.ca or call 1-888-465-1432 to speak to an experienced broker agent.
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