6 Questions to ask when choosing a Home Equity Line of Credit
A house is usually one of the biggest assets that a person owns. Whether it is big or small, it plays an important role in a person’s life. That’s why homeowners should decide very carefully when taking out a home equity line of credit.
Before taking out a home equity loan, here are some things to think about:
1. Are Interest Rates Relatively Low?
It is important to assess current economic trends to determine if a home equity line of credit is the right choice. Since a home equity line of credit is a variable rate product, it can be a great alternative to a fixed rate option, such as a credit card or unsecured loan.
2. Are There Any Stipulations Associated with Home Equity Line of Credit?
Home equity lines of credit are not exclusively used for home renovation or other similar purposes. They can also be used for other financial needs a person might face like an unanticipated expense or college tuition for a child. Here at First South Financial we place no stipulations on how you spend your proceeds - use it for home repairs, a new vehicle, educational expenses, etc. It's completely up to you.
3. Will There Be Any Additional Costs?
A homeowner thinking about a home equity line of credit should inquire about all the costs associated with the loan. There are often extra costs and fees with other financial institutions, but not here at First South Financial. We offer our home equity lines of credit with no points or origination fees.
4. Which Term of the Loan is the Best?
Next, it’s important to decide the term of your loan, since it can play an important role in managing the repayment. If you are in better financial condition, then a shorter term is better. If you can’t manage higher payments, then a longer term loan might be best.
5. How Much Time Does It Take to Get the Loan?
Thanks to technology, loan procedures aren’t as time consuming as they used to. The application submission, approval and loan withdrawal can take as little as a few days to a few weeks to complete. It is a good idea to ask questions about an approximate time that this process might take. Here at First South Financial, we can close your loan in about two weeks if not sooner!
6. Are There Tax Advantages Associated with Home Equity Line of Credit?
One of the advantages associated with home equity loans is the tax advantages available to homeowners. This tax advantage is not available with many other kinds of loans. Tax benefits differ from person to person so it's best to consult your tax advisor.
