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What Is A Home Equity Line Of Credit

Home Equity Line of Credit Information

A home equity line of credit is a bank loan that is typically used by homeowners who want to borrow money against the existing equity in their home. There are a number of different types of home equity lines of credit. The difference in these loans are typically based on the interest rate that is charged to the homeowner.

In some cases a home equity line of credit will have variable interest rates. These loans are unpredictable and the homeowner should fully understand what they will be responsible for when obtaining this type of loan. With a variable interest rate, a homeowner will not know for sure from month to month what your interest payment will be. . The interest rate on the credit line will vary at the same amount as the interest rate set by the Federal Reserve Board.

In other cases the home equity line of credit from a bank can offer a low introductory interest rate. These rates sound very attractive, but let the buyer beware, the grass isn’t always greener. These loans can hide the fact that the homeowner will shortly be responsible for a considerably higher rate. The homeowner needs to read and understand the loan details very carefully in order to know exactly what the will be and what they can potentially become prior to agreeing to the loan.

Another difference in obtaining a home equity line of credit deals with the costs of the application process. Some bank offer an amazing rate for a home equity line of credit, but there may be a large one-time fee. Another home equity loan could have a balloon payment that you are responsible for before you are prepared to pay it. A balloon payment is a sizable payment that is demanded from the homeowner at a certain period of the time. It could be at the end of each year that they homeowner is required to pay all of the principal and interest back and then the bank would re-extend a credit line back to the homeowner.  Instead of a balloon payment the bank may just ask for a higher rate.

With all of the options available, it would benefit the homeowner to seek the advice of a mortgage professional. At you can easily apply for a home equity line of credit and plainly see all of your options prior to making a decision. You can also communicate with a mortgage professional directly by filling out the form below.

If the differences in the multiple loan programs are confusing in any way from your lender, slow down and be sure all of your questions are answered. It may be better to consider alternatives to a home equity line. There are a number of alternatives that your mortgage professional can discuss with you. You might be better off just taking out a second mortgage if the rates and terms suit your needs better.

If you want to borrow or obtain a credit line that does not use the homes equity as collateral, take a look at what other collateral you have to offer. Perhaps you own some land somewhere where the value is not moving and the land has no financial benefit to you but you do not want to sell it.

You might have a business or valuable art collection. At and with our parent Cambridge Capital Partners we have a lot of flexibility to help you obtain the financing that is right for you.  We look forward to hearing from you.

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