Equity Line Of Credit Loan
What Can I Use the Equity Line of Credit For?
While you can no doubt find numerous uses for your equity line of credit loan, here are samples of the more common reasons for obtaining an equity line of credit loan.
Using your equity line of credit to consolidate other debts can not only eliminate the stress of multiple bills but can also give you a more favorable interest rate or tax benefit.
Use your equity line of credit to pay off the existing mortgage for better interest rates.
Add On, Update or Go Away
You may use your equity line of credit loan for renovating, buying new furniture or a car, or taking a vacation with less interest payments than using a credit card or store card making it a wise choice for large purchases.
When Should You NOT Use an Equity Line of Credit?
Before succumbing to what seems like 'easy money' it is important to evaluate the additional risk.
Some debts -- like student loans - have features that you may not be entitled to if you switch them to an equity line of credit.
Other items like cars and vacations may seem like a good idea to buy with your home equity line of credit, but with the ability to pay only the interest you may find the motivation to pay off the debt is lacking and end up owing for items that have lost their value or were consumable. Plan to pay off the debt quickly for the most advantage.
Second mortgage (or refinancing) may or may not be a good idea depending on interest rates and your repayment terms. While lines of credit take advantage of current low interest rates you may find that your regular loans protect you better from fluctuating rates if you will not be paying the loan down in the next few years.
Using your finances wisely can give you great relief and freedom. Before taking on any financial obligations it is important to understand the risks as well as the benefits.