Home Equity

A Few Advantages of Home Equity Loans and Lines of Credit

There are several reasons why your home is a good source of funding. These are outlined below. However, we must caution that home equity loans and lines of credit are secured by your home. If you default, you are at risk of losing your home to foreclosure and reposession. So, it is vital that you be able to make the required payments, on time. If you are living on a fixed income and have no other liquid assets, this form of borrowing can be risky. If you fail to make timely mortgage payments, you can lose your home ant there may be better options available to you.

Here are some of the primary advantages of home equity funding.

1) Conventional home equity financing is readily available from most mortgage lenders: That is, most banks, credit unions, savings and loan associations, and other mortgage lenders offer home equity financing. It's easy to shop for.

2) With a line of credit, you have convenient access to loan funds:

Most home equity lines of credit are accessed with checks or a credit card. This makes access to the funds easy and convenient. You present the check or card in the same manner that you would present any other check or card. The lender extends the funds and adds the amount to your principal balance. (Note: Home equity loans do not have this feature. When you obtain a home equity loan, the lender transfers the entire loan amount to you at the loan closing. When you obtain a reverse mortgage, you typically receive monthly disbursements in a fixed amount.)

3) Generally, interest payments on loans secured by your home are tax deductible, but there are some limitations. Talk to your tax assistant or a CPA.

4) Lenders typically offer better interest rates for this type of financing than they do for other, unsecured types of personal loans. In most cases, you'll be able to borrow an amount equal to 80 percent of the value of your equity considering that many credit cards and personal loans have interest rates in excess of 12%, and home equity loans are often below 9%, you can save thousands of dollars in interest alone over the life of the loan. Do the math, and make sure you are being offered what you deserve and clearly understand the payment terms before you sign the dotted line.

5) This is an excellent source of money in retirement. If you are retired or simply need extra money, and own a home, you may be able to get the cash you need by accessing the equity in your home.

Direct Lending Solutions is a credit resource designed to help consumers learn about a variety of financing options available to them. For more information about home equity loans, we also recommend the website to the United States Federal Reserve at http://www.federalreserve.gov/pubs/equity/equity_english.htm.

Home Equity News:

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Home equity loans drying up for some - Business - Personal ...
Like many homeowners during the housing boom, Lynnette Madden and her husband decided to open a home equity line of credit about a year and a half ago as ...
Americans' home equity near a record low - Business - Real estate ...
WASHINGTON ? Falling U.S. home prices have shrunk equity so much that the proportion of their homes that Americans actually own is near its lowest point ...
Students get creative to pay off loans - Business - Personal ...
Lines of credit typically work like a credit card, with a limit and a revolving balance: the average home-equity line of credit currently has an interest rate ...
Late payments for home equity loans rise - Business - Real estate ...
WASHINGTON ? Late payments on home equity loans climbed to a 1½-year high in the opening quarter of this year, while delinquencies on credit card bills ...
Home equity lines have dried up across U.S. - Business - Personal ...
Home equity lines have dried up across U.S. As home prices collapse, banks cut off credit, further souring the economy Below:
The Home-Equity Credit Crunch (Opinion) - Business - Small ...
The Home-Equity Credit Crunch (Opinion) How home price declines have contributed to tight credit for small businesses. Below:
Late payments rise on home-equity loans - Business - Stocks ...
Late payments on certain auto and home equity loans climbed in the final quarter of last year, while delinquencies on credit card bills largely held steady ...
Should I get a home equity credit line? - Business - Answer Desk ...
Nov. 5, 2004 ? Q: Would you please explain to me the pros and cons of acquiring a home equity credit line?... How does it affect your taxes?
Homeowners feel stress of life 'underwater' - Business - Real ...
A broad swath of homeowners ? those not headed for the worst-case scenario of foreclosure ? are nonetheless grappling with the impact of lost home equity.
Retirees no longer count on home equity - Business - Personal ...
Many Americans have recently found themselves changing retirement plans after losing a substantial amount of home equity as the housing market and the ...

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