Home Equity Pros And Cons
August 28, 2008
Despite the name, a home equity line of credit can be used to purchase anything you like and doesn’t have to be spent on the home.
For many with a poor credit report a home equity loan is the better option. Interest rates on other loans will be exceptionally high because of a poor credit history where as a home equity loan will be much lower.
The lower interest rate comes at a price though of course because you are putting up your home as security. Fail to pay back the loan and you could be facing a foreclosure notice.
For this reason home equity loans are not to be taken lightly. If you find you are in a lot of debt with several loans and credit card payments all going out each month, it makes sense to consolidate all those loans into one because you will be paying far less in interest charges.
Another nice bonus to a home equity loan is that the interest is tax deductable as long as you use the long form to file your taxes.
Add up your current outgoings in loan repayments, credit card debt etc. and get a few quotes for a home equity loan to see how much you would be saving. You then have to give serious thought to deciding if that monthly saving is worth the risk of losing your home should you fall on harf times before clawing back some of the equity in your home. The way house prices are going at present, that could take a seriously long time.
Tags: home equity, home equity line of credit, home equity loan
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