ANSWERS: 1
  • If you need credit, a home equity line of credit could be a good choice because it is a revolving credit plan that uses your home as collateral. Look around for a plan that meets your needs best. Always keep in mind that you must never miss payments. Otherwise, you could lose your home.

    For Large Expenses

    Home equity lines of credit provide consumers with an easy method of obtaining cash. If you have major expenses, such as home improvements, education or medical bills, you can pay using a home equity line.

    Deduct Interest

    Tax changes eliminated deductions consumers used to get for interest they paid on purchases. Interest paid on home equity lines of credit is still tax-deductible.

    Lower APR

    Generally, you will pay a lower interest rate on a home equity line than you will for other types of credit, since you use your home as collateral.

    Options

    You can choose if you want your loan to be an interest-only payment plan, which means you only pay interest during the life of the loan and then owe the principal balance when the plan ends, or to pay principal and interest, just like any other loan.

    Consolidate Debt

    If you are paying high interest rates on a variety of credit cards, you can use the home equity line to pay off your credit cards and then only have the home equity line to pay off.

    Source:

    The Federal Reserve Board: What You Should Know About Home Equity Lines of Credit

    Investopedia.com: The Home-Equity Loan: What It Is And How It Works

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