Advantages of Home Equity

After years of paying down your mortgage, you’ve built up a significant amount of equity in your home. Instead of using costly credit cards or high¬interest bank lines of credit, you can use that equity to your advantage by tapping into a Home Equity Loan or Line of Credit. You’ll save a considerable amount of money in the process.

Home equity loan:

This is a traditional loan in which a borrower uses built¬up home equity as collateral. Following approval, the homeowner receives a lump¬sum payment and makes fixed monthly payments over a predetermined period of time.

Home equity line of credit:

Like a line of credit, homeowners can draw funds as needed, up to a set limit. Once funds are drawn, the borrower must pay a minimum monthly payment, and can repay the entire amount owing at any time. Unlike a traditional home equity loan, interest is only paid on funds that have already been withdrawn.

Two major uses of home equity¬related financing are home renovations and debt consolidation. Renovations that can potentially boost the value of a home can offset the up¬front borrowing costs. Similarly, using home equity to shift debt from high¬interest credit cards to a much lower¬interest loan can significantly reduce interest payouts and improve overall cash flow.

As with all forms of debt, however, homeowners should always borrow conservatively by staying well within their overall debt limits, and should try to always pay more than the minimum to maximize credit ratings and reduce long¬term interest payments.

A mortgage broker can review your home equity options and compare this borrowing method to other financing alternatives.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Tracy Head and Laurie Baird help busy families find mortgage solutions. Together they have more than 45 years of experience in the mortgage industry.

With today’s increasingly complicated mortgage rules, Tracy and Laurie spend time getting to know the people they work with and help them to better understand the mortgage process. They support their clients before, during, and after their mortgage is in place.

Tracy and Laurie work closely with their clients, offering advice and options. With access to more than 40 different lenders, Tracy and Laurie are able to assist with residential, commercial, and reverse mortgages in order to match the needs of their clients with the right mortgage package.

They work closely with their clients to find the right fit, and are around to provide support for years down the road!

Contact them at 250-862-1806 or visit www.okanaganmortgages.com

Visit their blog at www.okanaganmortgages.com/blog


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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