The Guru Knows Equity

One of the advantages equity is the ability to receive a home equity loan or a home equity line of credit. Which one is best for you? Well here is some specifics of each.

Home Equity Loan

Do you want an adjustable or a fixed rate mortgage? About 80% of all loans come with a fixed rate. A fixed rate has a great advantage because the interest stays the same for the life of the loan. Unfortunately that means you cannot take advantage of lower interest, should that happen. But that also means that you will not be responsible for higher interest payments, if the interest rates rise. Adjustable rates may be a good idea for you if your living situation is only temporary. The reaosn for this is because your intial interest rate can often times be lower then the market rate. So you can take advantage of that. But if you are a person who loves stability and has a solid financial plan, then look for a fixed rate.

Home Equity Line Of Credit

Looking for flexibility and the ability to use what you want when you need it? A line of credit is the option for you. The drawback of this option, is if you miss a payment. If that happening, you put some of your assets at risk. But a line of credit allows you to write checks for any amount within your credit limit, for as long as you have that line of credit. Your payment will then be determined by the amount of credit you have used as well as the current interest rate. Therefore, you can use what you want when you need it. When the life of the loan is over, it will need to be renewed. Otherwise you will need to pay the loan off in full. Make sure you have the ability to repay. That will affect if and how much credit you can get.