Article : Bad Credit Home Equity Line of Credit - 3 Benefits of an Equity Line of Credit

By Carrie Reeder

Acquiring a home equity line of credit with poor credit has several benefits. Moreover, because lines of credit are secured, getting approved is simple and fast. There are many options available to homeowners hoping to get their hands on extra cash. While refinancing is a top choice, creating a new mortgage entails additional costs and fees. Here are three reasons why a home equity line of credit is advantageous.

Ability to Consolidate High Interest Debts

Consolidating debts and having one low monthly payment is a huge perk of home equity lines of credit. If you have a low credit rating or excessive debts, your credit card interest rate is probably 18% or more. Furthermore, creditors have the power to gradually increase rates.

Home equity lines of credit have low, fixed rates. While a homeowner may not become completely debt free, a home equity line of credit enables them to payoff credit card balances. Because of a low rate, home equity lines of credit can be paid in full within a few short years.

Home Equity Line of Credit: Easy Access to Funds

Home equity lines of credit are similar to revolving credit accounts. Upon approval, the lending institution will establish a line of credit up to your approval amount. To access funds, homeowners are provided checkbooks or ATM cards. Whenever you need to borrow money, simply write yourself a check or visit the nearest automatic teller machine and withdraw funds.

Lines of credit allow homeowners to borrow what they need. If paying off debts, make payments using your equity line of credit checkbook. After creditors receive and deposit payments, the funds are deducted from your available credit. Likewise, you may withdraw money for home improvements, college tuition, car repairs, and so forth. Although lines of credit are useful, and may improve your financial standing, avoid borrowing too much money. Failure to repay a home equity line of credit puts a property owner in jeopardy of losing their home

Deduct Interest Paid on a Home Equity Line of Credit

Homeowners who obtain a home equity line of credit have a huge tax advantage. The interests paid on home equity lines of credit are 100% deductible. To qualify, the funds must be allocated towards making home improvements, debt consolidation, college tuition, and other large expenses.

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3-Benefits-of-an-Equity-Line-of-Credit&id=137576

Article : Refinance Home Equity Line Of Credit - Options For Paying Off A Line Of Credit

Submitted By: Carrie Reeder

Refinancing a home equity line of credit can save you from rising interest rates. They can also help you develop a payment schedule that fits your budget needs. And if you consolidate your home equity loan with your first mortgage, you can save even more on rates.

Options For Paying Off Your Line Of Credit

A home equity line of credit with its open terms and rates, makes it an ideal candidate to refinance. The easiest option for refinancing is to roll over the loan to a second mortgage. You can choose fixed or adjustable rates and terms. Closing costs will also be minimal. The other choice is to combine your home loans into one mortgage. This will qualify you for lower rates than if you just apply for a second mortgage. However, if you already have a low rate mortgage, you could lose out on closing costs and interest charges. If you are thinking about doing a total mortgage refi, it’s best to compare numbers on your financing options. Factor in how long you have left on your original loan, future interest charges, and possible savings.

Be Choosing With Your Lender

Your current lender will automatically strive for your business, but take the time to look at other offers. The best way to make comparisons is to ask for loan quotes. These loan estimates should be based on preliminary information supplied by you. Don’t allow lenders to access credit report; unless you want to see your score go down. With loan quote numbers, look at the fine print. Compare the APR for overall loan costs, but also look at the closing costs and rates separately. If you don’t plan on keeping your home or loan for more than seven years, you don’t want to pay a lot at closing, even for a small reduction in rates. You won’t recoup the cost in such a short time.

Don’t Delay Refinancing

Once you find a favorable loan offer, start the application process to secure the rate quoted. With online applications, your loan can be processed in less than two weeks with paperwork complete through the mail.

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source : http://www.isnare.com/?aid=36144&ca=Finances

Article : Home Equity Line of Credit vs Loan

By Joseph V. Formale

When deciding between a Home Equity Loan against a Home Equity Line of Credit, first we need to determine what the money is being used for and how much money are we going to need. Generally, a HELOC (Home Equity Line of Credit) is a better choice for ongoing cash needs, such as college tuition payments or medical bills. These are recurring debts. When you need a set amount of money for a specific, one-time purpose, such as buying a car or a major home renovation, then you want to consider a HEL (Home Equity Loan).

When you're a homeowner, you have the collateral necessary to borrow against the equity value of your house through either a HELOC or a HEL. Both are essentially a second mortgage. The difference is a HELOC is a form of revolving credit, similar to a credit card. It allows you to draw funds whenever you need money, capped at a predetermined limit. There is generally a minimum payment due each month, with the option to pay off as much of the line as you want. With a HEL, you receive a onetime lump sum of money and have a fixed monthly payment that you pay off over a specific time period. In each case, factors such as your income, your debts, the value of your home, how much you still owe on your first or second mortgage, and your credit history will all be taken into consideration to determine the amount you can borrow.

The appeal of both of these types of loans is in their interest rates. They are almost always lower than those of credit cards or conventional bank loans, because they are secured against the equity value in your home. In addition, the interest you pay on a home equity loan or line of credit, is often tax deductible (consult a tax advisor about your particular situation). Unfortunately, both HELOCs and HELs usually carry a higher interest rate than that of a first mortgage. With a HEL, you may choose either an adjustable rate that fluctuates according to variations in the prime rate, or you may choose a fixed rate. A fixed rate enables you to budget a set monthly payment without worrying about increasing costs should interest rates rise.

With a HEL, there are also closing costs that you need to take into account. This refers to the money paid at closing to the lender. It may include one or more of the following fees: a loan origination fee, points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement.

A HELOC will usually carry a lower initial interest rate than a HEL, but its rate fluctuates according to the prime rate, so there is always more of an interest rate risk. Unlike a HEL, where your monthly payment is a set amount, a HELOC enables you to borrow funds as needed and repay as little as interest only each month. Also unlike the HEL, there are generally no closing costs when you open a HELOC.

One important fact to keep in mind is your home is the collateral for both a HELOC and a HEL. If a HELOC's easy access to cash tempts you to run up more debt than you can repay, or if you fail to make your monthly payments on you HEL, you risk losing your house.

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