Home Loan Info

Assisting You In Your Home Loan

Home Equity Line of Credit

For the homeowner, this can be a real advantage and the easiest way to get some extra money out of their home without having to go through the entire process of refinancing or taking a second mortgage to build that addition, pool, or even just some badly need renovations. With a home equity line of credit, the funds are available anytime that you need them.

A home equity line of credit differs from a second mortgage or homeowner loan, or just an equity loan in that with an equity loan, the homeowner applies for a specific amount of money with a specific purpose in mind. It also has a set payment schedule based on the amount of the loan and the interest rate that is in effect at the time the loan is negotiated and contracted. This can be beneficial for someone who needs all the money at that time and does not anticipate any changes in the loan needs.

On the other hand, someone who may be looking to make home improvements over a period may be better suited to a home equity line of credit. With this type of loan, a pre-approved line of credit is established, which the homeowner is allowed to access as needed. Depending on the lender, this money may be made available through a line of credit checking account, where the homeowner simply writes a check when the money is needed or he may need to go into the bank to withdraw money from the line of credit account.

The advantage to a line of credit is that you only make payments and pay interest on the funds that are actually used. Additionally, if interest rates fluctuate through the term of the loan, the homeowner will be paying the lower rate of interest instead of being locked into a fixed rate loan.

For most people, the equity line of credit is the best type of loan because you are not required to use all of the money at the same time, and as such, you only pay on what you have used at a given date.