Home Equity Loan

A Home Equity Loan

Low interest rates are a good time for home owners to take advantage of the value they have built up in their home.

There are generally two ways to use this reserve: home loans for specific amounts and tapping into a line of credit, each can be useful for special projects.

An equity line of credit allows the homeowner to have a checking account type set up, where money can be withdrawn and used as needed. This allows you to control of when and how much money is spent. It’s also a way to ensure that home improvement projects get done when you are ready to start.

It’s a good way to get the money for doing an addition on your home or a kitchen makeover. Projects like these can be an excellent investment by increasing the value of your home. Other needs, like a roof replacement or new heating and AC can be more basic but are things that can’t be put off.

The FDIC has a few tips

Contact several lenders
Comparison shop
Make sure you understand rates and payments
Be sure you can afford them
Understand the difference between a loan and line of credit
Be aware of any fees or points
Ask if there is a balloon payment
What is the penalty for missed payment