So you need some money for unexpected expenses. The roof took on a leak, the deck rotted through and a new family addition tightened living space. You bought too much Christmas on credit now the bills are overwhelming. Junior got accepted to that Ivy League school. Tapping into your home equity can help ease your financial burden. Before deciding on borrowing ask yourself a few questions first.
1. Do I need a home equity loan or a home equity line of credit?
If interest rates are low, a loan is a smarter choice. You can borrow the full amount at once ant get a fixed rate on the entire amount. The advantage allows you to know how much to budget for monthly payments.
On the other hand, a line of credit will let you borrow from a revolving line of credit with variable interest rates. You access the money just like a checking account by writing a check for the purchase. Then the amount used is paid back. If the rates fluctuate, your payments will also.
2. Are there restrictions on how I use the borrowed money?
Most loans and lines of credit can be used for a variety of things. Whether you want to consolidate all your debts into one, do some home improvements or pay for college tuition, an equity loan or line of credit can be the answer.
Be sure to ask yourself if you can afford the extra payments. Is your budget flexible enough? Will adding another payment won't over-extend a tight budget?
3. How do I find the best interest rate?
Your best bet to determine the variety of interest rates offered by financial services companies is to shop around. Ask questions. Try to find a company your comfortable doing business with. Look for ones that don't charge application fees. Ask about charging a penalty for early payoff.
4. What is the term of the loan? Is it better to get a 5- 10- or 15 year term?
You'll want to determine what your financial future strategy is when deciding on the term of the loan. If you're planning to retire soon, you may want to ask for a shorter term. The longer your loan terms, the lower your monthly payments.
5. Are there any tax advantages to borrowing with a home equity loan?
There are many good tax advantages to home equity loans and lines of credit. The interest is tax deductible on your federal income tax. Be sure to consult your tax advisor before applying for a loan to be certain of the deductions.
6. Is the loan application lengthy and how long before I get an answer?
More and more lenders are allowing consumers to apply for loans over the phone or on the Internet. It can take as little as 10 minutes for the application process. And many pre-approvals can be delivered in a few hours. Final approval often takes any where from 5 - 10 days while evaluating your house is taking place. Often the entire process can be completed without leaving your home with final documents and checks being sent through the mail.
Tapping into your home equity to ease financial burdens can be a good idea. Do your homework. Shop around. Set up your budget. Use the money for what you need.
The following is a series of questions I believe should be answered prior to signing any contractual agreement with any business corporation.
Is this a legitimate company? Whether we like to believe it or not, there are businesses out there that are misleading. Protect yourself. Do your research ahead of time and find out if the company is a member of the Direct Sales Association or the Better Business Bureau. A little bit of homework in the beginning can speak volumes for your future.
Is there a demand for the products or services being offered? Of course you are going to want to offer something that people want to buy. Look for quality and be selective in making your decision. We all know we can buy just about anything, anywhere. Look for something that is unique and of value. Consumable products are a wonderful choice because people will use the product and contact you for additional purchases once the product has been consumed.
Can you get excited about the products? Don't try to sell cookware if you detest cooking. Find a product or service that has changed your life and motivates you to announce it to the world. People will know when you are being genuine and if you can find a product that practically sells itself, that's even better!
What are the start up costs? I would suggest using caution with businesses requiring over $500.00 as an initial investment to start your business. This initial start up fee should always be in exchange for product and training materials. Look for businesses that require a low start up fee and do not require you to have a lot of inventory in your possession to be successful at sales.
Are there any established territories? Some companies will set limitations on how far you can sell outside your home based location. If you are looking forward to being able to travel and sell your product without territorial limitations, then you will want to make sure the company will permit you to do so.
Is there a residual income plan established? Team building and training can be one of the most rewarding and financially lucrative ways to establish a long-term income. Find out if this home based business offers a residual income plan and research the potential financial growth. Realistically, you can expect to invest 3-5 years if you are being intentional in your team building and training. Don't fall for any ?get rich quick? scams.
Will the company buy back any unsold inventory? This is a very important question to have answered if you are investigating a business that requires you to have a lot of inventory on hand to be successful. For those who are members of the Direct Sales Association, any resalable inventory will be purchased back from you should you decide to not maintain your membership. Be sure to research the specific terms and conditions.
Are there any monthly quotas? Some companies will require you to meet a monthly quota in order to maintain an active status. Depending upon how much time you are able to invest in the business on a weekly and monthly basis, you may want to ask yourself if this sales goal is reasonable for what you are trying to achieve.
What are the perimeters for marketing your business? Inquire as to how others are marketing the products and services. Are they limited to home shows and holiday bazaars? Does the company allow for the product to be retailed from storefronts? Does the company have a policy about online marketing and if so, do they allow their distributors to take advantage of one of the most effective ways to market today?
How do I opt-out should I decide to no longer be a part of the company? Find out if there are any hidden costs or penalties involved in no longer being a part of the companies distribution team. A clean and easy opt-out is always preferred.
The answers to these questions are critical and can greatly effect the outcome of your businesses success when paired with your vision for your future. Take your time when choosing the business that is right for your personality and lifestyle. Patience is a virtue.
Both Kirrhi Kreamer & Sabrina Coffin are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Kirrhi Kreamer has sinced written about articles on various topics from Mortgage, Social Issues and Motorola Cell Phone. This article is the property of LoanGuru.org and HomeEquityLoanStore.org - professional financial services with free quotes form multiple lenders - ,. Kirrhi Kreamer's top article generates over 49500 views. to your Favourites.
Sabrina Coffin has sinced written about articles on various topics from Credit Cards, Start Online Business and Mortgage. Sabrina currently resides in the Pacific Northwest and works exclusively from her home near her resort property at