Home Equity Lenders-Facts to Consider
A home equity line of credit can be a great solution if you’re looking for a way to tap into cash for a large purchase. Home equity lenders can help you establish a line of credit that will allow you to utilize a type of revolving credit with your home acting as collateral. MorgageLenders.org can help you shop around to find the right home equity lender for your needs.
What Exactly is Home Equity Line of Credit?
A home equity line of credit allows you to borrow money against the equity you have built up in your home. While lender guidelines vary, many home equity lenders establish a credit limit based on a percentage of the appraised value of your home, minus the amount you owe on the mortgage. So, if you have a $100,000 home and the home equity lender you have selected will allow you to borrow up to 95% of the value of the home; you could borrow up to $95,000, less the balance of your mortgage.
You should know certain other factors could also impact the amount of money you could potentially borrow. These factors include:
- Credit history
How Do I Pay Back My Home Equity Line of Credit?
It is important to understand that many home equity line of credits are set up so that you can tap into, or draw, from your line of credit over a period of time. For example, under your selected plan you may be able to draw from the line of credit over a period of ten years. Depending on the plan you selected, you may be able to renew the draw period. When and how you must begin repaying the line of credit also depends on the specific plan you select. Some plans allow you to repay over a period of time, similar to your mortgage. Other plans require you to repay the funds at the end of the draw period.
The Advantages of a Home Equity Line of Credit
A home equity line of credit provides numerous advantages, such as:
- You can qualify for a large amount of credit
- Use the funds when and how you want
- Interest rates can be low
- May be able to deduct the interest
Because plans do vary, take the time to shop around and choose the plan that is right for you. MortgageLenders.org can help you find the plan that will best fit your individual needs. Some of the items you should consider when shopping for a home equity lender include:
- Interest rate
- Cost for establishing the line of credit, including fees for property appraisal, application, attorneys, title search and title insurance.
- Transaction fees for withdrawals from the line of credit
- Minimum amounts required for each withdrawal
- Repayment terms
MortgageLenders.org can help you get started right now finding a selection of home equity lenders to meet your needs.