Top 4 Reasons To Get A Home Equity Line Of Credit
A home equity line of credit is like a credit card that uses your house as collateral. You draw on it whenever you need to, and borrow as much or as little as you need, up to a predetermined amount. You then pay it back when you can. Home equity lines of credit have variable rates that are based upon the prime rate. That basically means that the interest rate on home equity lines of credit changes as time goes on.
Home equity lines of credit are quickly becoming more popular, and lots of people are talking about all the benefits that come with these types of loans, and what you can use them for. But, with all that talk, there are also many people are wondering what you should not use the money for when you acquire a home equity line of credit. The answer is basically not to use a home equity line of credit on anything that does not grow or build your assets. Since you are using you house as the collateral (ie. base for the loan) you want to make you are acquire things with that money that will increase your assets. So, you most likely do not want to use your home equity line of credit on things like clothes, swimming pools, furniture, televisions, groceries and household bills, to name a few things.
So, what do you want to use a home equity line of credit for? As previously stated, you want to use it on things that grow your assets.
(1) Remodel
Many home remodeling jobs increase the value of your home. Thus, remodeling grows your assets—the value of your home. Make sure you do your research on what kind of remodel is actually going to add value to your home and therefore, grow your assets. Things like swimming pools don’t add value, and neither does extensive landscaping. Kitchens and bathrooms though, are sure winners every time!
(2) Buy a car
A car is an asset. It has value. And, especially if your home equity line of credit rate is lower than the interest rate for a car loan then this may be a good use of your home equity line of credit.
(3) Education
Education is an asset that grows your earning potential. Once you acquire it no one can take it away from you—a permanent asset, if you will.
(4) Credit card debt
Most credit cards have high interest rates. By paying down that debt with a lower interest rate mechanism like a home equity line of credit, it will help you to eliminate debt faster.
But, as a word of caution, understand with home equity lines of credit since you are using your home as collateral you are putting your home at risk if you miss payments or cannot make your payments any longer. Remember to discuss all the terms of your line of credit with your mortgage company thoroughly.
For more information on <a href=” http://www.canadianmortgagesinc.ca/line_of_credit/”> Line of credit</a> and <a href=” http://www.canadianmortgagesinc.ca/line_of_credit/”> 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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