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Is A Home Equity Loan Right For You

Is A Home Equity Loan Right For You?

Is A Home Equity Loan Right For YouYou probably know that your home is most likely the largest asset you own. You’ve spent time and money to make your home your castle, your retreat and your refuge, adding value to it along the way. A home equity loan can be your key to putting that added value to work for you, allowing you to take advantage of the equity you have in your home to accomplish goals such as consolidating high-interest credit card debt, helping your kids with college costs, buying a new car and more.

Simply put, equity is the difference between how much your home is worth and how much you owe on it. If your home is worth $300,000.00 and your mortgage balance is $200,000.00, you have $100,000.00 equity in your home. A home equity loan allows you to use some of that equity for another purpose, and in many cases the interest you pay is tax-deductible.

There are two types of home equity loans. The first is a lump sum loan that you pay off in a certain period of time; the second, known as a Home Equity Line of Credit, or HELOC, is more like a credit card, allowing you to borrow up to your credit limit over and over during the life of the loan.

As with any loan or line of credit, there are benefits and risks associated with home equity loans that you should carefully consider before applying for one. The benefits include lower interest rates than other sources of credit such as credit cards, and tax-deductible interest. Potential risks include 1) the fact that if you fail to pay the loan back, you could lose your home and 2) if your home’s value drops, you could wind up owing more than the house is worth.

Click on the following link for more detailed information about home equity loans and how they work:

http://www.bankrate.com/finance/home-equity/what-home-equity-debt-is-2.aspx

PrimeWay is a Houston credit union that offers a variety of options to suit your financial needs.  Click on the following link for more information:

PrimeWay: Home Equity Improvement Loans