Is
a home equity loan right for you?
It's always a good idea to save for major purchases, but
sometimes you can't. In that case, a home equity loan may be
worth its weight in gold to you.
A home equity loan is a loan that is secured by the equity in
your home. You may be able to borrow up to 125 percent of your
home's value at current market prices for a home equity loan,
less the balance you owe on your mortgage. You can get a
one-time home equity loan at a fixed rate of interest that you
take out for a specific purpose. Alternatively, you can obtain a
home
equity line of credit (HELOC) with a pre-agreed ceiling and
fluctuating interest rate that you can use for many things over
a period of years, paying the balance down between purchases.
The main virtue of home equity loans and lines of credit is
that they carry a lower rate of
interest than credit cards and unsecured consumer loans.
Why? Because using your home equity as security reduces the risk
of a loss for the bank. And
another benefit for you is that the interest on your home equity
loan may be tax deductible. (Check with your tax
advisor.)
You can use your home equity loan for:
- debt consolidation
- home improvements and landscaping projects
- new cars
- college tuition fees
- emergency repairs, purchases and replacements of
appliances, roofs, furnaces and the like
Renovations and repairs that will enhance the value of your
home are a particularly appropriate use for your home equity
line of credit. So is consolidating your consumer debt that
carries a high interest rate, such as outstanding credit card
balances that you find hard to pay. A long-term, fixed-rate home
equity loan allows you to pay off all your cards in one fell
swoop, and leaves you with one predictable monthly payment you
can manage ?as long as you resist the urge to start charging
things again.
It's best to be conservative about how you use a home equity
loan. In particular, think twice about buying stocks or starting
a new business venture with the money. If the stock price goes
through the floor or the business loses money, your home is at
risk.
It's also wise to be conservative about how much you borrow
against your home. Some lenders may be willing to advance you 90
percent or more of the value of your home equity. If house
prices in your area fall, so will your home equity and your
borrowing limit. Your lender may then call your loan, asking you
to pay back any borrowed funds in excess of your new, lower,
limit.
Before borrowing, make sure you research the kinds of home
equity loans that are available, and ask your lender to explain
the details of how they work.
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3.Bi-weekly mortgage calculator
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5.How much can I borrow?
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6.Should I pay discount points?
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7.How much will I save by refinancing my loan?
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8.How much will my tax deduction be?
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10.Interest only monthly payment calculator
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