A home equity line of credit is an excellent way to access money that is just sitting untapped in the form of equity of your home.
A bank or financial institution will consider granting you a line of credit if you have built up a certain amount of equity in your home. The amount that the bank will extend to you is dependent on the amount of equity you have. The maximum allowable is 60% that value. Say your home is worth $400, 000, which will likely be determined by an assessment ordered by the bank. You may qualify for 60% of that, which is $240, 000.
If that $400,000 home, the value of which would be determined by an assessment officer, had an outstanding mortgage of $150,000, then the difference is $250,000. Therefore, if the bank grants 60% of your equity, your line of credit could be $150,000. That percentage may fluctuate depending on other debt you may be carrying.
The probability of having your line of credit approved is very high, as long as you're in the bankers good graces and your credit score is good. Even though it's your equity, the line of credit is treated like a loan which you must pay back. However, the interest rates are far lower than a bank loan or credit card. It's the most inexpensive way to take out a loan.
After you have accessed the funds on your line of credit, the bank or finance company will expect you to pay just the interest on your balance. You can make whatever payment you wish over and above that interest payment. You can let the outstanding balance sit there for as long as you own your home, as long as you continue to pay just the interest. When the house is sold, all disbursements will take care of the balance.
The banks may issue checks to you and you can transfer funds form your line of credit into your bank account either in person or online. It is not advisable to use your line of credit as you would a credit card to make small purchases. While many people access their line of credit for emergencies or to pay the bills during temporary hardship, the best use of your home equity is for a huge expense such as a car, RV or boat or to purchase something that will make you more money.
Many people use their equity as a down payment on a second home or a revenue property. Some will flip their equity into an investment funds or stock market. It's like borrowing money from yourself at the lowest possible interest rates. - 29969
A bank or financial institution will consider granting you a line of credit if you have built up a certain amount of equity in your home. The amount that the bank will extend to you is dependent on the amount of equity you have. The maximum allowable is 60% that value. Say your home is worth $400, 000, which will likely be determined by an assessment ordered by the bank. You may qualify for 60% of that, which is $240, 000.
If that $400,000 home, the value of which would be determined by an assessment officer, had an outstanding mortgage of $150,000, then the difference is $250,000. Therefore, if the bank grants 60% of your equity, your line of credit could be $150,000. That percentage may fluctuate depending on other debt you may be carrying.
The probability of having your line of credit approved is very high, as long as you're in the bankers good graces and your credit score is good. Even though it's your equity, the line of credit is treated like a loan which you must pay back. However, the interest rates are far lower than a bank loan or credit card. It's the most inexpensive way to take out a loan.
After you have accessed the funds on your line of credit, the bank or finance company will expect you to pay just the interest on your balance. You can make whatever payment you wish over and above that interest payment. You can let the outstanding balance sit there for as long as you own your home, as long as you continue to pay just the interest. When the house is sold, all disbursements will take care of the balance.
The banks may issue checks to you and you can transfer funds form your line of credit into your bank account either in person or online. It is not advisable to use your line of credit as you would a credit card to make small purchases. While many people access their line of credit for emergencies or to pay the bills during temporary hardship, the best use of your home equity is for a huge expense such as a car, RV or boat or to purchase something that will make you more money.
Many people use their equity as a down payment on a second home or a revenue property. Some will flip their equity into an investment funds or stock market. It's like borrowing money from yourself at the lowest possible interest rates. - 29969
About the Author:
Jennifer has been in the Florida real estate field for over 15 years, so before you think about getting a loan you should drop by her site to read further information that cover Florida home equity lines of credit and bad credit home equity line of credit.
