Finance: Do you need a home equity loan or line of credit?

Do you need a home equity loan or line of credit?

Written by Jakob Jelling

A home equity line of credit is very closely related to a home equity loan but repparttar

subtle differences can mean a lot. Determining which option is repparttar 134967

best for you relies upon you knowing your current situation and having a clear plan for what you wish to accomplish with repparttar 134968

money.

A home equity loan is a lot like a mortgage. With a home equity loan you are able to borrow repparttar 134969 amount of your homes value that you have already paid off. The benefits of this type of loan is that it is almost always guaranteed since it is based upon repparttar 134970 amount of your home that you already own, repparttar 134971 terms are almost identical to a mortgage and you receive repparttar 134972 entire amount of repparttar 134973 loan up front after closing.

While a home equity loan is also based upon repparttar 134974 amount of your home that you currently own, repparttar 134975 terms of repparttar 134976 loan are very different. A home equity loan is basically a credit card where repparttar 134977 limit is repparttar 134978 amount of equity that you have in our home. Instead of receiving one large lump sum of cash, you will receive an overdraft type of service on your account that will allow you to withdraw as much or as little of repparttar 134979 equity that you wish to use.

Which choice is better for you? The answer depends upon what you need repparttar 134980 money for. With a home equity loan repparttar 134981 monthly repayment schedule is known and repparttar 134982 interest on your loan will be lower than most other types of loans. However, with a home equity line of credit, you have instant access to cash and repparttar 134983 payments will vary depending but repparttar 134984 interest will vary. With this in mind repparttar 134985 question really becomes do you need access to a varying amount of money or one known lump sum of cash?

A lump sum of cash with a set repayment schedule is great for specific things such as debt consolidation or repparttar 134986 funding of specific projects with a predetermined cost. If you are considering debt consolidation for credit cards or any other high interest loans a home equity loan is most likely a very good idea. You will be able to repay all of your debt and will only have to make one monthly payment at a lower rate of interest that you are currently paying on your cards and other unsecured loans.

Credit counseling and its effects

Written by Jakob Jelling

All to often credit is fun, easy to get and even easier to use. Many people find that even though they have an excellent income, that they can not keep up with their current debt load and even if they are managing to make their monthly payments they are not getting ahead. Is there a solution to this situation without having to claim bankruptcy or adversely effecting your credit score?

Credit counseling may very well be repparttar answer for this type of situation. Credit counseling is designed to help correct your problem without impacting your credit score and may actually help improve your credit score. Credit counseling works by ensuring that all of your creditors are getting paid on time, eliminates repparttar 134966 trap of revolving credit and helps you to learn to over come your credit problems.

Upon entering into a credit-counseling program you will be asked for financial details and to surrender most of your credit cards. Almost all programs acknowledge that you need a credit card or two for business or travel and will not try to restrict your ability to work and live in a reasonable fashion. Once your situation is assessed a plan will be made so that your will be debt free in three or four years and you will be offered repparttar 134967 help you need to keep out of repparttar 134968 situation that you are currently in.

While your credit score will not be effected an entry will be placed on your file. The entry on your file will generally say "DMP" or "credit counseling". This entry is put there to you from obtaining additional credit cards. Once you have completed your credit counseling this entry is generally removed or updated to reflect that you have finished repparttar 134969 program.

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