If You Choose A Home Equity Loan, Then You Must Take Out The Funds In One Lump Sum

Category: Finance.

If you are considering doing any work on your home, then a home equity line of credit can provide the value and convenience you need to get the job done at the pace you determine. Best of all, your equity line is tax deductible giving you one more incentive to borrow.

Indeed, with a ready reserve of cash to draw upon you can borrow as little or as much as you like up to the full amount of the line. Read on and we ll explore how you can maximize what is commonly called a HELOC to your full advantage. If you purchased your home and its value has risen steadily over the years then the equity or cash value of your home has increased accordingly. A home equity line of credit or HELOC are funds that are made available through the equity of your home. Moreover, with every payment you make, more monies are used to reduce the principle. That equity is a ready made repository of funds that you can tap either through a loan or a line of credit.

The difference between what you owe on the home and its current value is the equity. If you choose a home equity loan, then you must take out the funds in one lump sum. This means that if you have three different projects you want to tackle, you need only borrow funds at various times and as needed. If you choose a HELOC, you take out the funds as needed. You save on interest because you don t start accumulating interest until the funds are tapped. Most lenders will not charge an application fee for your HELOC and you can work with them to find the term that works best for you.

Finally, if you choose not to access the full amount, you don t have to. Lines of credit can be open for as little as one year all the way up to twenty years, even beyond in some cases. Any home assessment done should be covered by the lender, not the borrower. In many cases no credit check is required as the funds are simply monies borrowed from your equity. So, what are you waiting for? Tap your home s equity via a line of credit to accomplish the work that you would like to get done on your home today and over the next several years.