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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 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 line of credit is like a second mortgage, in that you use your property as collateral for the 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 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 lines, which are loans that are paid in a
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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 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 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.
ohn 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: www.scourtheweb.com/mortgage/
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