Home Equity Loan Comparison
Home Equity Loan & Home Equity Line of Credit (HELOC) Comparison.
Home equity loans are a popular financing option for homeowners who need additional cash. These loans usually offer a lower interest rate than credit cards. In addition, the interest you pay may be tax deductible (consult a tax advisor).
A homeowner could take out a fixed rate home equity loan or HELOC to consolidate debt, usually higher rate debt, such credit cards with high interest rates.
Unlike a Home Equity Line of Credit (HELOC), a Home Equity Loan is a set, lump-sum amount, typically with a fixed rate and fixed payments for the life of the loan. You cannot add additional money to the same loan once it has closed. Rates on home equity loans run a few�percentage points higher than a home equity line of credit (HELOC), but you have the added security knowing the rate and payment will always stay the same.
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If experts are to be believed, home equity loans have many useful purposes. In an ideal scenario, homeowners select these loans as a way to reduce and eliminate their credit card debts. This is a wise move especially considering that home equity loans have lower rates than most credit cards.
From the list of Home Equity Loans features you can tell that this type of loan is a great source of financing with lower-than-average rates because the loan is collateralized by your home. But sometimes it helps to put the financial product into context so that you can see how it might benefit your life.
Lenders sometimes offer a temporarily discounted interest rate for home equity lines–a rate that is unusually low and may last for only an introductory period, such as 6 months.
Home equity loans are usually tied to the Prime Rate published in The Wall Street Journal. The prime rate is also used to set credit card rates and auto loans.
Some Home Equity Loan Terminology :
The Ethical Lender Rate Directory – The Truth about Loans section allows consumers to search for mortgage rates while at the same time flagging those mortgage lenders that abide by the Borrower’s Bill of Rights and are in good standing with the Better Business Bureau.
Annual percentage rate (APR): A standard calculation used by lenders. It is designed to help borrowers compare different loan options. For example: a loan with a lower stated interest rate may be a bad value if its fees are too high.
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