| A home equity line of credit can be a life saver when | | | | over a much more manageable amount of time. |
| you have a project or a short term cash necessity, | | | | In contrast, the variable rate that that applies to a |
| however the term (the amount of time) in which you | | | | home equity line of credit leaves you vulnerable to |
| have to pay the loan back is likely to be considerable | | | | changes in the mortgage indexes (the thing that your |
| shorter than you would get were you to take out a | | | | interest rate is based on). In addition to the variable |
| home equity loan instead and the interest rate is likely | | | | rate of a equity line, your payment is likely to balloon at |
| to be a variable rate (more on variable rates later). | | | | the end when you need to pay off the loan in its |
| The most important thing you need to consider before | | | | entirety. |
| taking out either loan is "will taking out this loan effect | | | | Before you sign any type of home loan contract that |
| your ability to make your monthly payments and | | | | puts your home up as collateral, it is recommended |
| possibly jeopardize your home. | | | | that you weigh the following considerations. |
| For this reason I would recommend that while | | | | 1. Are you going to need the money as a single lump |
| considering the flexibility that comes with a home | | | | sum? If so than you will likely want to apply for a |
| equity line of credit, you also consider taking out a | | | | home equity loan. |
| home equity loan instead. The reason for this is that | | | | 2. Or are you looking to draw out funds over time? If |
| with a home equity loan you attach the sum to your | | | | so than a home equity line of credit may in fact be |
| already existing mortgage and the debt is spread out | | | | what you're looking for. |