Home Equity Loan or a Home Equity Line of Credit?Written by Syd Johnson
A home equity loan is good for items that require one large payment. This is why so many consumers use it for debt consolidation. The interest rates on home equity loans are low enough to be beat out prevailing rates on almost every other type of consumer debt. In this era of teaser rates, it is safe to say that no one is safe when it comes to long term debt.Financial institutions are constantly updating their rules to penalize customers based on their behavior even if they have great credit. One late payment or an over-the-limit fee can take you from a 3.9% interest rate to over 19%. It is no wonder that more consumers are willing to use a home equity loan to manage their finances. It is an easy, accessible, low cost option. However, usually, once you get a home equity loan, you must pay off amount before you bank will consider you for another loan. It is easy to see why this would be case. A home equity loan decreases your available equity, increases your debt obligation to your lender, and is usually a sign that your monthly bills are getting beyond your control. Once you’ve been approved for your loan, it puts you in a less than ideal position as a potential borrower. Home Equity Line of Credit is revolving so it can cover expenses over and over again. A home equity line of credit functions as a revolving credit line that is always open in case you need fast access to some cash. It operates just like a credit card in sense that limit is finite, interest rate is applied only when you have an unpaid balance, and any amount you take out reduces total remaining balance.
| | Do You Know the Pros and Cons of Interest Only Mortgage?Written by Marie-Claire Ng
Has any lender ever told you Interest Only Mortgage was like a double-edged sword? It can help you achieve your dream of owning a home more easily, but it also can create a financial hardship for those who don’t fully understand what’s involved.In attempt to lure potential homebuyers, lenders have come up with various creative mortgage options. One of more popular offers is Interest Only Mortgage. As name implies, with Interest Only Mortgage, monthly payment will be applied to interest portion only. In a traditional mortgage option, monthly payment applies to both interest and principal, even though, in early years, interest portion is much more than amount paid to principal. Interest Only Mortgage has become more popular to new homebuyers for following reasons: · Since monthly payment is low, savings can be used for personal spending, paying off higher interest debts, buying furniture for new house, or even investing.
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