The common type of home equity loan is called as a ?closed end? equity loan which allows a certain amount of money based on the value of the house. More money cannot be borrowed on the same equity loan. However, if more money is needed at a later stage another loan can be obtained. Many people prefer a home equity loan to clear off their debts as the money is borrowed against their houses. They get very low interest rate resulting in lower monthly payments than any other loans. It also helps to consolidate all the debts into one single debt, which can be handled with ease.
The other type being the home equity line of credit, which too works the same way as the home equity loan except for the fact that more money can be borrowed against pledging the house, some times even up to 125 percent of the value of the house. The home equity line of credit is for a person who does not have any idea of how much money is needed to borrow. With this option the person can get more money borrowed against his house very easily.
Home equity line of credit also helps the borrower to postpone the payment of principal for a certain period of time agreed upon by both the lender and the borrower or to get a special discounted interest rate. Some lenders even offer flexible interest rate where the borrower pays both the principal and the interest or avails fixed monthly payment plan. It is up to the borrower to choose from. The home equity line of credit comes with a shorter term payment plan. However the risk of losing the home in case the loan payment is defaulted should be thought about.
It is not a big achievement to get a home equity line of credit, but the key lies in the effective utilization of funds. The house is the biggest asset for any person and the home equity loan helps in take the full advantage of it.
Home equity line of credit can be used for unexpected emergencies such as the medical expenses or even for a funeral expenses. The required money is got quickly without damaging the credit score.
Credit card debts, loans and so on can be effectively managed with the help of home equity line of credit. It is wiser to clear off the debts with higher interest rate like the credit card debts and loans and pay back the home equity loans with a lower interest.
Educational expenses are very expensive these days, even a community college will cost thousands of dollars per semester. Home equity loans can be very invaluable in paying these expenses.
For remodeling the house, the amount got through a home equity line of credit is best utilized. New additions like a bedroom, bathroom or remodeling can be done to increase the value of the house. As an owner, the person enjoys the benefits or updates and at the same time adding more value to his house.
In years past, my wife and I have planted a few trees, purchased some so-so patio furniture and tossed a kiddie pool and Slip ‘n’ Slide in the backyard for the kids. But now that our kids are a little older and our time together includes multiple family barbecues and casual get-togethers each summer season, we have finally decided to make our ramshackle backyard into an outdoor retreat that really suits who we are and how we live.
Since we’ve been in our home for several years and housing prices in our neighborhood have skyrocketed recently, we thought it was time to take out a home equity line of credit (also known as a HELOC). By using the equity we have built up in our home over the years, we were able to create the backyard we’ve always dreamed of.
The home equity process was quick and simple. All we had to do was find out how much our home was worth, what our payoff was and provide a few other bits of information – and in no time we were off and running! Our home improvement line of credit application took just a couple of minutes to complete – and within seconds of completing our online application, our HELOC loan was approved.
After a few short days we received our home equity line of credit Visa Cards (one in each of our names) from Chase Home Equity. Making purchases could not have been easier; all we had to do was use our Visa Cards to purchase the things we needed to make the most of our HELOC funds.
Being a do-it-yourselfer, I took on the task of landscaping my new backyard, but I hired contractors for the built-in barbecue area for our summer get togethers and our big, new pool and spa to replace the kiddie pool and Slip ‘n’ Slide.
While I was a installing brick borders and planting the fruit and shade trees for our new summer oasis, my wife took her home improvement line of credit Visa to purchase the perfect patio furniture so we could replace our weathered and splintering wooden furniture. She also managed to buy some outdoor dinnerware and a few fun pool accessories for all our summer parties.
The pool and barbecue are nearly complete now – and with a couple of months before summer officially begins. Because of the quick turnaround on our home improvement line of credit from Chase, we’ll be able to enjoy the entire summer by the pool.
If you’re faced with another summer of barren backyards and sub-par patio furniture yourself, it’s not too late to have the backyard retreat of your dreams completed before summer begins. Just apply for a home equity line of credit and your perfect backyard could be well within your reach – and at a better interest rate than you would get using a regular credit card.
Both Lesley Lyon & Jim Templeton 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.
Lesley Lyon has sinced written about articles on various topics from Sauna, Finances and computers and the internet. Lesley Lyon is an expert in dealing with finance related matters. He has written several informative articles on topics like credit card, debt consolidation, building a good credit score, mortgage, home refinancing, loan and insurance. He regularly contri. Lesley Lyon's top article generates over 90500 views. to your Favourites.
Jim Templeton has sinced written about articles on various topics from Finances. Jim Templeton is a do-it-yourselfer who has not only renovated his own home, but now writes articles for home owners who need a little extra guidance in completing their own renovations.. Jim Templeton's top article generates over 1600 views. to your Favourites.