What Is a Home Equity Line of Credit?
Debt is something many of us will experience throughout our lives. Whether you’re struggling with student debt, credit card debt, etc., the stress that debt can cause affects every part of our lives.
Sometimes, we get to a place where debt becomes unmanageable and feel as if we have nowhere to turn to for assistance. The hope here is that there is always a solution, you just have to be sure that the solution is right for you. That solution may be a home equity line of credit
What is a home equity line of credit?
A home equity line of credit, or HELOC, enables you to borrow money at a low mortgage interest rate using the equity that you’ve already built up in your home. It’s similar to a credit card although the interest rate is better, coming with a flexible repayment schedule.
What are the benefits of a home equity line of credit?
A home equity line of credit allows homeowners to spend their money when they want with a flexible repayment schedule to make their payments on time. The interest rate you pay on a home equity loan is higher than that of a first mortgage, but is drastically lower than the interest of a credit card or other consumer loans. So, it’s an option to put money in your pocket, without the insane interest rates and impossible payment deadlines.
What’s the difference between a line of credit and a loan?
When you’re taking out a loan, you know the amount of money that you are going to have to pay back from the beginning. Loans are used to pay for mortgages, school, vehicles, etc. and you will pay back the loan in equal instalments.
What are the benefits of a home equity line of credit?
- A home equity line of credit is like a credit card, without having to worry about the minimum monthly payment.
- You only pay back what you spend.
- You don’t need the lender’s approval before you decide to make a purchase.
- You only receive money when you need it.
- Minimum payments are lower.
- Closing costs are lower.
After looking at a few of the benefits of a home equity line of credit, you might decide that this option is exactly what you’re looking for. If that’s the case, or if you have any further questions, please contact us at Canadalend.com . We’re here to help you with your financial needs and get you started on the path to financial freedom.
Sources: http://www.huffingtonpost.com/aj-agrawal/the-difference-between-a_b_11482200.html
