5 Tips for Getting the Best Home Equity Credit Line
With your home’s value likely higher than a few years ago and interest rates near all-time lows, you may be thinking about taking out a home equity credit line. Average interest rate: roughly 4 to 5%, far less than the roughly 16% charged by many credit cards.
But, according to experts I’ve interviewed, there may be better alternatives, such as a home-equity loan or, if you’re 62 or older, a reverse mortgage. “The decision boils down to what is the purpose of the borrowing,” says Greg McBride, chief financial analyst at Bankrate.com.
A big risk: rising payments
And if you will be taking out a tax-deductible home equity line of credit (HELOC) of up to 80% of your home’s value or so, you’d better be familiar with the risks, especially the likelihood that your payments will rise substantially.
“This is not a today decision, this is a today-and-tomorrow decision,” says Gerri Detweiler, director of consumer education at Credit.com.
If you’re in the market for a home equity line, you’re in good, and growing, company. Americans took out $35.2 billion in home equity lines in the second quarter of 2014, up 27% from a year ago, according to Experian. One reason: “It’s absolutely easier to qualify for a home equity line than a few years ago,” says Odysseas Papadimitriou, CEO and founder of Wallethub.com.
Read the rest here.
Source: MSN Money, 11/5/2014