Home
Equity Credit Line
If
you need to borrow money, home equity lines may
be one useful source of credit. Initially at least,
they may provide you with large amounts of cash
at relatively low interest rates and they may provide
you with certain tax advantages unavailable with
other kinds of loans. (Check with your tax advisor
for details.)
At
the same time, home equity lines of credit require
you to use your home as collateral for the loan.
This may put your home at risk if you are late or
cannot make your monthly payments. Those loans with
a large final (balloon) payment may lead you to
borrow more money to pay off this debt, or they
may put your home in jeopardy if you cannot qualify
for refinancing. If you sell your home, most plans
require you to pay off your credit line at that
time. In addition, because home equity loans give
you relatively easy access to cash, you might find
you borrow money more freely.
Remember
too, there are other ways to borrow money from a
lending institution. For example, you may want to
explore second mortgage installment loans. Although
these plans also place an additional mortgage on
your home, second mortgage money usually is loaned
in a lump sum, rather than in a series of advances
made available by writing checks on an account.
Also, second mortgages usually have fixed interest
rates and fixed payment amounts.
You
also may want to explore borrowing from credit lines
that do not use your home as collateral. These are
available with your credit cards or with unsecured
credit lines that let you write checks as you need
the money. In addition, you may want to ask about
loans for specific items, such as cars or tuition.
