If you need
to borrow money, home equity lines may be one useful
source of credit. Initially at least, they may
provide you with flexible amounts of cash at relatively
low interest rates. An Equity Credit Line offers
you the flexibility of ready cash, at a low interest
rate, whenever you need it -- simply by writing
a check.
Home
Equity Credit Line
A home equity
credit line allows you to borrow against the equity
in your home. You can use it to pay for a vacation,
home improvements, debt consolidation or even your
daughter's tuition. Accessing your credit line is
as easy as writing a check and as the principal is
repaid, you'll be able to use it again. You can also
establish fixed rate loans for specific purposes under
your credit limit with a set monthly payment.
Because your Home Equity Credit Line is secured by
your home, the interest rate is generally lower than
with other loan types. There are minimal or no setup
fees and in most cases the interest is tax deductible
(be sure to consult your tax advisor).
Pros
- Flexible
access to funds
- Potential
tax advantages
- You only draw
what you need
- You only pay
interest on what you borrow
Cons
- Ties
up equity making it unavailable for other needs
- Higher
interest rate than a first mortgage
