Home Equity Loans and Lines of Credit

Using the equity in your home is a great tool when it comes to financing. Whether it be to consolidate debts, pay for a child's education, make home improvements or buy a new car, equity rates are usually lower, and are usually tax deductible (consult your tax advisor).

Home Equity Loans

Home Equity loans are fixed rate, fixed term loans, much like a car loan. The amount, rate and term of the loan will depend on the equity that you have in your home. There are loans available up to 125% of your homes value, less any existing mortgages, but they only apply in certain circumstances. More typical loans would be 80%, 90% or 100% financing of the value of your home less any outstanding mortgage.

Home Equity Lines of Credit

Home equity lines of credit are variable rate loans, and act much more like a credit card. Many will require you to make interest only payments. The interest rate is usually at a margin over the Prime rate. As the prime rate changes, so will the rate on your line of credit. Credit lines are of great use to individuals who have inconsistent cash flows, like self-employed individuals. At times, the rates on credit lines can be significantly lower than other loans, and the interest is usually tax deductible (consult your tax advisor). Equity lines are also great for those who often use their credit cards, especially for things like holiday shopping and vacations, where it may take a few months to pay off the balance. Equity lines are also great for emergencies. Many people have unused equity lines available to them in case of a financial emergency, or a good investment opportunity. If there are any annual fees on the line of credit, they are usually very small. What's your peace-of-mind worth to you and your family? The maximum amount of your line is figured out the same as a home equity loan, as in the example above.

Contact Us to see if a home equity loan is right for you.



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