How to Open a Bank Account Online

How to Open a Bank Account Online header image 2

Home equity plan

4 Comments · Uncategorized

If you are in the market for credit, a home equity plan is one of several options that might be right for you.

Before making a decision, however, you should weigh carefully the costs of a home equity line against the benefits.

Shop for the credit terms that best meet your borrowing needs without posing undue financial risks.

And remember, failure to repay the amounts you’ve borrowed, plus interest, could mean the loss of your home.

What is a home equity line of credit?
A home equity line of credit is a form of revolving credit in which your home serves as collateral.

Because a home often is a consumer’s most valuable asset, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day to day expenses.

With a home equity line, you will be approved for a specific amount of credit.

Many lenders set the credit limit on a home equity line by taking a percentage (say, 75%) of the home’s appraised value and subtracting from that the balance owed on the existing mortgage. For example:

Appraised value of home $300.000
Percentage x 75%
Percentage of appraised value = $ 225.000
Less balance owed on mortgage $ 120.000

Potential line of credit $ 105.000

In determining your actual credit limit, the lender will also consider your ability to repay the loan (principal and interest) by looking at your income, debts, and other financial obligations as well as your credit history.

Many home equity plans set a fixed period during which you can borrow money, such as 10 years. At the end of the draw period, you may be allowed to renew the credit line.

If your plan does not allow renewals, you will not be able to borrow additional money once the period has ended.

Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a fixed period (the repayment period).

Once approved for a home equity line of credit, you will most likely be able to borrow up to your credit limit whenever you want.

Typically, you will use special checks to draw on your line. Under some plans, borrowers can use a credit card or other means to draw on the line.

There may be other limitations on how you use the line. Some plans may require you to borrow a minimum amount each time you draw on the line (for example, $300) or keep a minimum amount outstanding.

Some plans may also require that you take an initial advance when the line is set up.


4 Comments so far ↓

  • bahis siteleri

    …Recent Blogroll Additions…

    [...] What web host are you the usage of? Can I get affiliate hyperlink to your host? I wish web site loaded up as quickly as yours lol[...]…

  • bahis siteleri

    …A Friend recommended your blog…

    [...]you make blogging glance[...]…

  • jordan retro 12

    jordan retro 12…

    I must express some thanks to this writer just for bailing me out of such a incident. Just after searching through the world wide web and coming across ways which were not beneficial, I assumed my life was done. Existing without the solutions to the pr…

  • kobe shoes

    kobe shoes…

    My husband and i felt thrilled that Edward could conclude his homework while using the ideas he received from your web page. It is now and again perplexing just to find yourself giving away procedures which some people could have been making money from…

Leave a Comment