-
They typically have a lower
interest rate
-
They are easier to qualify for if
you have bad credit
-
Payments on a home equity loan
may be tax deductible
-
Borrowers can get relatively
large loans with this type of loan
Common Home Equity Loan Uses
Borrowers use home equity loans for
some of life’s larger expenses, because homes tend to have a lot
of value to borrow against
For example, you find that a lot of
borrowers want to
-
Remodel or renovate the house
-
Pay for a family member’s college
education
-
Finance the purchase of a second
home
-
Consolidate high-interest debts
Pitfalls of Home Equity Loans
Before using a home equity loan for
any purpose, you should be aware of the pitfalls of these loans.
The main thing is that you can lose your home if you fail to
meet the payment schedule required by the loan.
Another common pitfall of home
equity loans is that scammers have found plenty of ways to cheat
homeowners out of their most valuable asset. Be sure that you
know who you’re doing business with. If something smells fishy
(like a high-pressure sales pitch or an inability to put things
in writing), then take a step back and make sure the deal is
legitimate.
How to Find the Best Home Equity
Loans
Finding the best home equity loan
can save you thousands of dollars – at least. In order to get
the best loan, I recommend that you:
-
Shop around. Try a variety of sources
(banks, brokers, and
credit unions)
-
Manage your credit score and make
sure your credit reports are accurate
-
Ask your network of friends and
family who they recommend
-
Compare your offers to those
found on websites and advertisements
Additional Home Equity Loan Tips
To make the deal work out in your
best interest, make sure that it is the right deal in the first
place. Is a home equity loan a better fit for your needs than a
simple credit card account? If you’re not sure, figure it out
before you put your home at risk.
Plan out your budget ahead of time.
Make sure that taking the loan will not overburden you.
Review and consider insurance to
cover the payments if something happens. You may or may not need
insurance. If you’re going to include it in your program, try to
pay the premiums monthly – not up front |
