Refinancing vs Line of CreditWritten by Gary Gresham
Refinancing vs line of credit are two popular options you have when deciding best way to take equity out of your home. Sometimes it makes sense to establish a line of credit. But in other situations it's better to get a cash back refinance mortgage loan. You can find out which loan is best for your situation by doing some simple math. The amount of money you need to borrow and length of time you need to pay it back really determines if refinancing vs line of credit loan makes most sense. Home equity lines of credit are based on adjustable type mortgage rates and move up or down when Fed raises or lowers prime rate. If you don't need to borrow much money and plan to pay off loan in a short amount of time, an equity line of credit may work best for you because you pay least amount of interest. An advantage of a home equity credit line is banks offer their lowest interest rates on adjustable mortgage rate type loans. Also, equity lines of credit usually come without typical closing costs you pay with a cash back refinance mortgage loan. Average closing costs on a refinance loan usually amount to several thousands of dollars. So when you are trying to decide between refinancing vs line of credit that should factor into your decision. Another advantage of a home equity credit line is they are more flexible than a cash back refinance mortgage loan. With a home equity credit line you only pay interest on amount you borrow. The remainder of credit line is available at any time without paying any interest. Home equity credit lines work well for smaller loan amounts, but if you need a large amount of money, say $75,000 to $100,000, you may want to consider a cash back refinance mortgage loan.
| | Inflexible friends and plastic assets, why money isn’t buying love anymoreWritten by Rachel Lane
It would appear that even though their “friends” aren’t as flexible as they used to be, consumers are still stretching their credit cards beyond comfort zone.The vicious circle of debt manipulation involving banks, consumers and commercial credit companies is putting consumer spending under strain, as funds begin to dry up. In May 2005, Financial Times reported accusation that banks were fuelling Britain’s personal debt problem by repeatedly offering debt-ridden customers loans they were unable to repay. As UK’s personal debt increases by £1 million every four minutes, credit card spending habits still seem to be spiralling out of control. According to Credit Action, nearly 66% of adult population have a credit card, with multiple card holding becoming a growing phenomenon in UK. More than 60% of card holders possess at least two cards, with 10% holding at least five cards. There has also been a significant rise in number of personal bankruptcies. In year up to March 2005, 37,886 people were made bankrupt, a 30% increase on previous year. Credit Action reported that some credit card companies reduced their minimum repayments from 3% to 2% last month, which has been seen by some as irresponsible. To put this into perspective, a £3000 credit card balance at 17.9% APR would now take more than 40 years to repay if minimum repayment of 2% is paid each month, in comparison to 19 years with 3% minimum repayment. Barclays even warned of falling profits for Barclaycard credit card division last month, as more customers missed repayments and bad debtors increased.
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