Line Of Credit Loan Pros

With a Line of Credit you use the money as you need it and pay interest only on the amount that you have used. Works sorta like a credit card...As long as you haven't maxed out the line there will be money available for you to use. Normally a line stays active for around ten years. So you can pay it off and use it again if you need to.

With a personal loan you ge the entire amount up front and you make payments for a specified amount of time until the loan is paid. You will not be able to use the money again like you can with a line of credit.

2008-06-22 19:44:19 by Susan B

A home equity loan and a home equity line of credit both provide money from the value of your home. But each one has its pros and cons.

I need money for home improvements, and I also want to get my mortgage payment lower.

I bought this home in march 07, and I have made minor improvements, but the house needs improvements.

If there are any real estate pros out there with some good practical advice please expound on this topic.

Also, I have paid off some credit card debt since I bought the house, so I think my credit rating is better.

You really need to give a little more information in order to get the best answer: how much is your house worth today, how much is your remaining mortgage, what interest rate are you paying.

If you have some equity, go for a Home Equity Line of Credit (HELOC). Shop the interest rate and the terms around from your mortgage company, your bank, and other banks. Most offer $0 in closing costs as long as you keep the HELOC open for 3 years. Basically whatever the line of credit is, you can tap into by writing a check at any time, pay some off, and then write another check at any time up to your credit line. Generally the interest you pay on the money is also tax deductible. Also, you only pay interest when and if you use the line of credit. It doesn't cost you anything unless you tap into it, so you can also use it for temporary emergencies, and just keep it open even if you don't need it at the moment. It shouldn't cost you anything to leave the line of credit open but unused.

An interest rate with good credit is around the Prime rate (currently 7.75), plus or minus 0.25 point.

If you have a high interest rate and/or an adjustable rate mortgage on your regular mortgage and your house is worth the same or more than when you bought it (it might not be in a lot of markets right now), then instead of a HELOC you should just look to refinance to a lower interest rate. Make sure it's a fixed rate. Then you can use the money you save to pay off any higher interest debts such as credit cards and then do some of the repairs to your home.

Being that you want to get your mortgage payment lower, you should refinance first, and then get the HELOC after you refinance to do the repairs.

Good luck.

2007-10-21 04:31:05 by Lord of Chaos

Pro's and con's of both.

Just curious what people "in the know" have to say.

A loan is structured with the intention of you paying it off, with interest, over a fixed time period.

A "HELOC", or home equity line of credit is structured much more like a credit card, where the lenders goal is to keep you paying interest for the rest of your life.

Neither are a very good idea, but the HELOC is worse than than the loan.

2007-08-25 06:57:28 by Emu Non Grata V1.5

Please, no self-advertisement if you're a loan agency, etc... I simply want to be informed about APL's and getting a personal line of credit from the bank.

Robby, you have been asking a lot of questions about finance; personal loans, credit cards, etc. But you have not mentioned anything about systematic ways to save some of your money.

You are young, I believe 22 years of age. Unless you will at sometime inherit a large fortune, you probably are not a wealthy individual. But I can tell you how you can be wealthy one day.

A portion of every paycheck should be set aside in a form of savings. If you could set aside a certain percentage of every paycheck into an investment portfolio, it's possible that you could be a millionaire by the time you retire.

It doesn't matter how much money you earn, if you have a lot of credit, other than a home mortgage and car loans, you won't have much left to save. Remember this, that with forty or so years from the time one begins a job or career, it will be time to retire. All that will be there at retirement when get there is what you send on ahead.

My suggestion for you is to see a Certified Financial Councelor to help you plan for your future, and forget about all the different ways to get yourself and your future in budensome debt.

2008-05-28 20:19:36 by Robby Lace

If i'm struggling with my credit card, and cannot qaulify for a loan to pay it off, is a personal line of credit a good solution? What are the pro's and con's to a personal line of credit? I bank through wells fargo and my minnimum payments are up to $100.00 a month with only a credit balance of 1200 dollars. Looking for some advice on the best way to get the debt paid off with the smallest payment per month with no penalties. Any advice is much appreciated!

They way to get it paid off quickly is to pay more, not less, each month. Go with the way that has the lowest interest rate and no fees.

2009-12-16 19:35:00 by Aliandra