The Advantages of HELOC Loans
HELOC loans are home equity line of credit loans; loans such as these can used for whatever you want to spend it on. HELOC loans can be obtained in a variety of ways. You can get it in one lump sum, or set that sum aside to be used in increments, or you can even be issued a credit card based on the amount you have borrowed. Some HELOC loans are paid back with an adjustable rates mortgage, and others are obtained with a fixed rate mortgage. If your loan is being used like a credit card, you will only pay on the amount of money you use every month, and the interest rate is like that of a credit card. In fact, you can think of your house as money in the bank, or a better analogy is that your turn your house into a credit card with a HELOC loan.
The great thing about HELOC loans is that you can use them for anything. You can pay off debt, go on vacation, go on a shopping spree, send your children to college, or just pay of an existing mortgage with money to spare to spend in any way you wish. One great thing about the HELOC loan for homeowners is that the interest that you pay on this loan is tax deductible. This in itself could be a reason to opt for this loan, especially if you are paying to send a child to college, because the interest you pay is almost like money in the bank.
Did you know you can save money on your auto insurance by taking out a HELOC loan? By taking out auto insurance with a higher deductible you can save lots of money on your car insurance. In the event that an accident happens you will have the HELOC loan as money in the bank to pay the higher deductible. Normally an insurance deductible is $500; however, did you know that you can cut your insurance premium by at least 25 percent by raising your deductible to $1000?
Why Do You Want a HELOC Loan
Before you sign for a HELOC loan you need to have a clear understanding of what your goals. You might want to ask yourself what you want to accomplish by taking out a HELOC loan. How do you plan to use the money, and how do you want to pay it back. One of the reasons homeowners like the HELOC loan is that they can sometimes negotiate a HELOC loan at a lower rate of interest than with other types of refi loans.
If you desire to consolidate your loans, or combine all your credit card debts into one monthly payment a HELOC loan may be the best kind of loan for you. The APR on credit cards can be as high as 25 percent; by rolling your debt into a HELOC loan you can often save money on the interest rate.
Questions to Ask About HELOC Loans
Before you take out a loan, you might want to do a little research on your own to find out the pros and cons of taking out a HELOC loan. You also might want to ask your loan officer to give you a run down on the pros and cons of this kind of loan. Will it be to your advantage to take out a HELOC loan? What, if any, are the drawbacks of taking out this kind of loan? Your loan officer might also want to ask you some questions about why you are considering a HELOC loan.
A question you can ask your loan officer is if you can take out a HELOC loan to pay off a 30 year mortgage in 15 years. If the principal amount of your mortgage is $100,000 you can save you over $70,000 by paying the loan off early. The payments may be more than $200 higher per month by paying off your mortgage in 15 years. A HELOC loan can afford you a lower interest rate than a conventional loan, which will reap you thousands of dollars in savings over the term of the loan.
A HELOC loan is a second mortgage, with a lower interest rate than other loans. You can borrow up to 80 percent of your home’s value. You can pay down your existing mortgage with your HELOC loan and you are paying back a revolving line of credit. You may borrow $100,000 or more with your HELOC loan, depending on the value of your home, and if you pay $50,000 into the principal balance of the primary loan, thereby saving a significant amount of money on the life of the primary loan.