With interest rates on the rise, and the real estate market
slowing, people are understandably hesitant to touch the record
low mortgage rates they have locked in. When the need for cash
arises, a home equity loan or home equity line of credit could
be a great source of money used to pay off high interest debts,
remodel or improve a property, or cover an unforeseen financial
situation.
A home equity loan, also called a second mortgage, is simply a
loan secured by the equity in your home. It is a second
mortgage, because unlike with a refinance loan where you
refinance the existing mortgage, you secure a separate loan
using the equity in your home as collateral.
A home equity line of credit (HELOC) is an open-ended loan,
meaning you only borrow money when you want to. It is also
backed by the equity in the borrower's home. Interest paid on
either a home equity loan or a home equity line of credit is
usually tax deductible.
Which home equity product do you need? A home equity loan
provides a lump distribution of the borrowed amount. While you
can use the money as you see fit, the fact that you receive the
money all at once makes the home equity loan suitable for one
time expenditures, like a vehicle purchase, or paying off another
higher interest debt. A home equity line of credit is better used
for paying recurring expenses like those associated with running
a business or attending college.
Because home equity loans and home equity lines of credit are
backed by the equity you have in your home, past credit
problems, while taken into consideration by lenders, will not
necessarily prohibit you from getting the loan. Other factors, like
the loan to value ratio, the amount of equity you have built up in
the house, and your income and employment information are all
weighed.
If you want a low interest loan that you can use for any purpose,
Citibank offers home equity loans and lines of credit with some
of the lowest rates in the mortgage industry. They were one of
the first banks to offer 30 year fixed rate home equity loans, and
they do not charge the borrower points, closing costs, or
application fees. To unlock the value of the equity in your home,
visit Citibank's My Home Equity site today.
|
|