Does it affect my credit rating if I borrow against my life insurance policy instead of getting a home equity loan?
by 3 hours ago
ANSWERS: 2
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No and it might be better to use your life insurance instead of a getting a home equity loan. If you have whole life insurance, you can borrow against its value. There is no time limit and you do not have to pay it back. If you do not, however, the amount of the loan is deducted from benefits paid to your beneficiaries upon your death. You should pay it back. Home equity loans are inexpensive and relatively easy to obtain, and the interest part of the loan may be tax deductible. However, the collateral for the loan is your home. A home equity loan can be a useful strategy if used properly but lenders are in no hurry to have you pay it back and the low-pressure repayment terms may hinder your progress. From Optima Financial.
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Borrowing against life insurance is NOT a good idea. There is a limit as to how much you can borrow and the interest is not deductible. Additionally, most people never really pay it back and so the death benefit is reduced by the balance plus interest.
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