How To Choose Your Home Equity Line Of Credit Loan
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Article Title: How To Choose Your Home Equity Line Of Credit
Author: Joseph Kenny
Word Count: 551
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When it comes to getting the equity out of your home, one of
the best tools available may be the home equity line of credit
(HELOC). While not for everybody, it can provide you with the
equity in your home, access to cash, and a way to choose how
much money you use. Not every HELOC plan, however, is equal.
Here are some things to look for when you start looking for
Home equity loans are a great way to take advantage of the
equity in your home. Since you are not paying interest on all
of the money only on what you use, it creates a handy way to
use the equity - when and if you need it. During the draw
period, you have free access to the money.
Before you sign the agreement for a HELOC, however, you need to
know that it is basically a second mortgage. This means that it
will add another payment each month and you need to know in
advance how much it will be. You should be able to comfortably
make the payment without it being difficult or creating too
much of a financial strain.
As a second mortgage, you will also have various closing costs
and other fees added when you sign for the loan. Among these,
you will also usually find an appraisal fee, a surveyor's fee,
originator fees, and more. Some of these may be waived, but you
will need to know what each of the fees is for. Some lenders are
now charging few fees but you may need to look around.
Monthly and annual fees may also apply - depending on the
particular lender. You need to look carefully at each of the
fees to make sure you understand exactly what each fee is for.
The interest is also another thing that you should pay close
attention to. Home equity lines of credit are most often
adjustable rate mortgages which means that the payments are
flexible and will frequently change. Find out how often the
interest rate is calculated in order to get the best rates. It
is not uncommon for the rates to be calculated on a daily
basis, and sometimes it is on a monthly time frame.
Many HELOC's also have what is called a margin, which is
basically another interest above the interest rate (APR). The
thing about this is that you will usually not be told what the
interest rate is - unless you ask about it. There could be
quite a variation in the margin rates - so be sure you ask, and
do not take it for granted that it will be low with that
You will also want to know how the home equity loan will be
amortized. Some of these have balloon payments that are due at
the end of the draw period. Your only option may be to
refinance at that time. Oftentimes, though, your amortizing
payments are set up at the end of the draw period, and you
simply start paying till the loan is paid for. Check to see if
you have the option to automatically renew your home equity
line of credit, too, since some lenders will do that for you.
About The Author: Joe Kenny writes for http://www.rebuild.org/,
visit today for some home equity loan offers here,
http://www.rebuild.org/home-equity-loan.html or visit the UK
Loan Store for some great homeowner loans here,
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