| A home equity line of credit is very closely related to a | | | | loan is most likely a very good idea. You will be able to |
| home equity loan but the subtle differences can mean | | | | repay all of your debt and will only have to make one |
| a lot. Determining which option is the best for you relies | | | | monthly payment at a lower rate of interest that you |
| upon you knowing your current situation and having a | | | | are currently paying on your cards and other |
| clear plan for what you wish to accomplish with the | | | | unsecured loans. |
| money. | | | | Home equity loans also make perfect sense if you |
| A home equity loan is a lot like a mortgage. With a | | | | know the exact amount that you need to borrow. |
| home equity loan you are able to borrow the amount | | | | While it is always nice to have cash on hand it is often |
| of your homes value that you have already paid off. | | | | better to have more credit available to you. The more |
| The benefits of this type of loan is that it is almost | | | | of your credit limit that you use up the higher the |
| always guaranteed since it is based upon the amount | | | | interest rates will be for you and the tougher it will be |
| of your home that you already own, the terms are | | | | to borrow more money in the event of an emergency. |
| almost identical to a mortgage and you receive the | | | | It is definitely to your advantage to only be in debt for |
| entire amount of the loan up front after closing. | | | | a specific amount to complete one project. |
| While a home equity loan is also based upon the | | | | A line of credit option may be better depending upon |
| amount of your home that you currently own, the | | | | what you wish to do with your money. While you will |
| terms of the loan are very different. A home equity | | | | still use up a portion of your credit limit, the payments |
| loan is basically a credit card where the limit is the | | | | and impacts on your available credit may be lower. |
| amount of equity that you have in our home. Instead of | | | | With a line of credit you always have the same |
| receiving one large lump sum of cash, you will receive | | | | amount of money available to you. As you pay off the |
| an overdraft type of service on your account that will | | | | amount of credit used, you can reuse that portion if |
| allow you to withdraw as much or as little of the equity | | | | needed without having to apply for another loan. Also |
| that you wish to use. | | | | your payments may be considerably lower since you |
| Which choice is better for you? The answer depends | | | | are only paying on the amount of money that you |
| upon what you need the money for. With a home | | | | have actually used, not the total amount borrowed. |
| equity loan the monthly repayment schedule is known | | | | As you can see there are some big differences |
| and the interest on your loan will be lower than most | | | | between a home equity loan and line of credit. If you |
| other types of loans. However, with a home equity line | | | | are looking at a single project, such as a new car or |
| of credit, you have instant access to cash and the | | | | adding a pool to your home, a home equity loan is the |
| payments will vary depending but the interest will vary. | | | | better choice for you. However, if you are looking at |
| With this in mind the question really becomes do you | | | | starting up a new business, wish to travel or can not |
| need access to a varying amount of money or one | | | | settle on predetermined amount money, then a line of |
| known lump sum of cash? | | | | credit is the better option for you. With a line of credit |
| A lump sum of cash with a set repayment schedule is | | | | you can use as much of your credit as you wish |
| great for specific things such as debt consolidation or | | | | whenever you wish and, much like a credit card, you |
| the funding of specific projects with a predetermined | | | | can reuse the amount of the line of credit that you |
| cost. If you are considering debt consolidation for credit | | | | have repaid with out having to re-apply for a loan. |
| cards or any other high interest loans a home equity | | | | |