Using Home Equity as a Source For a Line of Credit

home equity

A home equity line of credit with a low interest rate is the best of loans for those in need of cash quickly. A home equity line of credit offers the borrows the ability to cash in on what is available to them due to diligently making mortgage payments. If you have been in your house for a good period of time, or if your house has appreciated significantly, you will have a great deal of equity from which to borrow from. The tax benefits and low interest rate also provide the borrower motivation to secure a loan through these means rather than typical credit cards.

The Security involved with a HELOC

heloc

Home equity lines of credit, otherwise referred to as a HELOC, is truly a home equity loan. These types of loans require the borrower to pledge property as collateral or security for the loan. Lenders compete diligently for this type of business and will offer a credit line with the lowest rate of interest based on your credit score. You will have to repay this loan in monthly payments, similar to the mortgage on your home. A HELOC is another alternative to refinancing.

HELOC and Home Equity Loan Alternative

loan alternative

An alternative to home equity credit lines is for the homeowner to apply for a second mortgage. A second mortgage generally is disbursed in a lump sum, as opposed to a credit line that can be drawn from as needed. Additionally, a second mortgage can be obtained with a fixed rate, with fixed monthly payments and a maturation date. Bear in mind a second mortgage can be dangerous should you fall behind on your payments. To default even on a second mortgage could cause you to lose your house.

disclaimer

News & Events

  • Read the fine print on those mortgage rate lock offers - 2018-11-18
    The recent rise in mortgage rates has created a head-scratching dilemma for both buyers and sellers. For buyers, higher rates mean higher monthly mortgage payments. For sellers, higher rates equate...
  • First American: Mortgage rates overshadowing healthy economy - 2018-11-19
    In October, potential existing-home sales rose from the previous month, but fell below 2017 levels, according to First American’s Potential Home Sales Model. “While the housing market continues...
  • GRBJ: Mortgage rates should continue to increase - 2018-11-18
    Mortgage rates are steadily increasing. According to Joshua Gibbs, community president/commercial lending for Commercial Bank, the mortgage rates in the area now are anywhere from 5 percent to 5.25...
  • U.S Mortgages – Rates Steady after early November’s Jump - 2018-11-17
    Following the previous week’s 11 basis point jump in 30-year fixed mortgage rates to a 7-year high, rates held steady in the week ending 15 th November, with a number of factors pinning mortgage...
  • Mortgage Rates Maintain Recent Lows - 2018-11-19
    Mortgage rates unexpectedly dropped to their lowest levels in more than a month as of last Friday. That assertion is at odds with quite a few media reports that cited Freddie Mac's weekly survey data ...