Introduction
Credit equity loans come in handy to many home owners for multiple reasons such as purchasing a second house or for major items such as education, medical bills, home improvement and much, much more.
What you must realize about this type of loan is that by borrowing this money, you will have up to 10 years of payments depending on your specific credit line and your credit history but here are 6 tips you must consider when it comes to credit equity loans.
History
Clear Credit History: Your credit should be clear of foreclosures and bankruptcies to receive the lowest possible interest rate and the best terms. A home equity line of credit typically has a lower APR than any other loan on the market.
Beware of Scammers: There are many scammers in the world today looking to take money from unsuspecting individuals. Be sure you do your homework with any company that you are dealing with. Get referrals from friends and family if you are unsure where to start in choosing the right company. This is also one of the most reliable ways to avoid the scammers while getting a good credit equity loans.
Equity Loan vs. Credit Card: Make sure that an equity loan would best fit your particular circumstance. Many times, just a simple credit card will suffice and you will not have to go through the possibility of losing your home if defaulting on the loan.
Features
Your Primary Residence will be used as Collateral: Your primary residence will be used as collateral to your credit equity loan. Realize that defaulting in this loan will place the residence you used as collateral in jeopardy so paying this loan on time should be your top priority 2.
Payments Can Be Tax Deductible: The payments made on your credit equity loan can be tax deductible. Please consult with your tax professional for more information on this.
Have Proper Financial Planning: Even though you qualify for your credit equity loan doesn’t mean you will be able to afford it. There are many unexpected things that life throws our way. The loss of a job, our car breaks down and needs major repairs. Make sure you prepare for this when considering applying for a loan.
Tips and comments
Due to the economy still being in a recession many new requirements have been placed on lending institutions when it comes to issuing loans to borrowers. These new requirements are making it harder and harder for individuals to qualify for loans. Make sure you know these requirements before applying.
A credit equity loan is a big financial decision that needs a lot of thought and consideration before going through with. Having the possibility of losing your home or destroying your credit is a possibility. We high recommend you consider you weigh all of your option beforehand. The main thing you need to do is to shop around. See what the different institutions are offering before making your final decision and most important of all make sure you plan for the worst as you will be glad you did.
