Equity Loans or Equity Lines of Credit?

Isn’t it nice to think that if you are ever in debt or need some extra cash for your child’s college tuition or that random house project that comes along, you have a way to come up with the money? I mean, think about it. Let’s say you have no room in your budget for paying a penny more for anything.

You already have a mortgage and other bills to pay. Your income will not allow for any more spending. But you need more money. Well, home equity loans are used like credit but you can get the money immediately or in increments. The best part of home equity loans? Home equity loans and lines of credit are both often tax deductible.

Home equity is basically the amount of your house your own. In other words, it is the amount of your house you have already paid off (with down payment and/or mortgage). You can get a home equity loan or line of credit for this amount, and you simply pay it back with interest for as long as you need.

What’s the difference? The difference between home equity loans and home equity lines of credit is that you can get loans in cash, for the full amount, upfront. With lines of credit, they work similar to a credit card, where you can take money out when and if needed.

People use home equity loans and lines of credit for many different things. The purpose and reasoning behind purchasing the loan usually dictates whether you get a loan or a line of credit. If you are in need of immediate cash in a large amount for a one time payment or an upfront payment, you will most likely be best of getting a loan. However, if you want to have that money as an option and support but you do not need it all at once and you may not want to use it all then, perhaps, you should consider a line of credit.

Common reasons to use home equity loans and lines of credit are to reduce monthly payments, reduce the tax burden, get better terms on a home purchase or refinance loan, have cash for emergencies or unexpected (large) purchases, and last minute costs that turn out to be for more than you bargained.

Countrywide Home Loans specialists are there to explore your Home Equity with you, explain how it works and what options you may have for opening a home equity loan or line of credit. Then, if you are ready, Countrywide can take you through the Home Equity Loan application process and explain it step by step.