Home Equity Loan or Home Equity Line of Credit – Which is right for you?Written by Charles Essmeier
The most common type of home equity loan is term loan. This loan is set for a fixed amount of time, anywhere from five to fifteen years. Such loans are typically granted for up to 80% of value of home, but some lenders will lend up to 125% of home’s value.
Is this type of loan right for you? The term loan works best for those who need to borrow a fixed amount of money for a specific purpose – paying for a wedding, a home remodeling project, a fixed educational expense, or debt consolidation. This would give borrower a fixed repayment schedule, where he or she would pay a set amount of money each month for a specific period of time.
An increasingly popular alternative to home equity loan is a line of credit. This type of loan works like a credit card, and has a revolving line of credit, in which borrower may borrow
| | Leave Home Without It...How to Avoid Credit Card DebtWritten by Johann Erickson
It would seem that a day doesn’t go by without receiving a credit card offer in mail. Oftentimes, offers seem too good to pass up. But before you’re tempted to apply for that “platinum card”, there are a few things you should know.
Too many people see credit cards as a means of buying things they wouldn’t normally be able to afford. It’s very easy to live beyond your means when you only have to make a “low minimum payment” once a month. But what most people fail to realize is that interest only continues to pile up on your outstanding debt. When you make only minimum payments on your credit cards you're often not even covering interest from previous month, let alone making a dent in paying off principal. At that rate you can be paying off your credit card debt for decades. It’s like trying to put out a fire with an eyedropper full of water. Also, be wary of those seemingly thoughtful letters from credit card companies praising you for being such a valued customer and as a "reward", they offer to let you skip a payment. Don't be fooled. Interest is still accumulating, making more money for credit card company.
If you feel yourself drowning in a sea of debt, there are some things you can do to help yourself. For starters, look into lowering your credit card interest rates. Sometimes all it takes is a phone call to your current credit card provider to negotiate a lower interest rate, especially if you threaten to take your business elsewhere. If they’re not willing to work with you, then it’s well worth time to do a little research to find out which credit cards are offering a better rate. Generally speaking, anything under 12% is considered good. If your credit history is fairly stable it’s an easy process to transfer your credit card balance onto another card. Just remember, point of making a balance transfer is to pay down your debt. It should not give you license to start charging above your means once again. If you’re not careful, this kind of maneuvering can become a vicious cycle.
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