Home Equity Line and a Home Equity Loan

Guest 0.10 Dollars($)

I would like to know the difference in a Home Equity Line and a Home Equity Loan.
Can anyone tell me about it.

Guest 0.10 Dollars($)

Hi,

The difference is that a home equity line is an open line of credit on which you can make multiple advances up to your approved credit limit over a period of time. It has a variable rate based on the prime rate. Minimum monthly payments change based on the balance you owe.

On the other hand a home equity loan is made for a specific amount and term. The rate is fixed, so it's locked in for the term of your loan.

Guest 0.10 Dollars($)

Hi Moriz,

One more thing is there; for home equity loans, all the loan proceeds are disbursed when the loan is made and monthly payments remain the same for the life of the loan as it is a fixed rate home loan.

Guest 0.10 Dollars($)

Thanks to you all for the information and anyone let me know one more thing as to how can I decide if a Home Equity Line or a Home Equity Loan is best for me?

Guest 0.10 Dollars($)

Hi Moriz,

That decision will be based on your needs, your preference and feelings about fixed versus variable loan rates. Some of the questions you may want to ask yourself like, What for you will use this money? Do you need the money all at once or over time?

If your goal is to pay off debts and develop better financial habits in the future, a Home Equity Loan may be best. If your goal is to pay for college tuition or home improvements over several years, a Home Equity Line may be best.

Heath.

Guest 0.10 Dollars($)

Other thing is that how do you feel about a variable rate versus a fixed rate. At the time the loan is made, the variable rate is almost always lower than the fixed rate. If you think rates in general will remain relatively low for a while, that might make the variable rate more attractive to you.

The variable rate might also be attractive to you if you think you may pay off the loan much sooner than the maximum term—so there's less time for rate fluctuations. And if you feel more comfortable knowing from the beginning what your rate will be —even if it's a little higher than the initial variable rate—then you may want to consider the fixed rate Home Equity Loan.

Guest 0.10 Dollars($)

Hi,

Please anyone tell me What points should I take note of at the time of closing equity loan.

Guest 0.10 Dollars($)

In all cases, you should review the loan documents before signing. Documents may vary, depending on the state in which you live. Typically, your documents should include a Credit Agreement or Promissory Note, a
signed document that acknowledges a debt and shows that the borrower is obligated to pay it.

Deed of Trust or Mortgage:

A legal instrument in which a lien on real property is granted as security for the repayment of a loan. In some states, a deed of trust is used rather than a mortgage. Additionally, in many cases you will have three days after you sign the documents to change your mind and cancel the loan for any reason.

This three-day right is known as your "Right of Rescission". The right of rescission does not apply to all accounts. If this right applies, you will receive a separate disclosure in your closing package, informing you of this right.

If you are not clear with the information in the documents for any reason, you may always decide not to close your loan, even at closing. If you have any questions about your loan documents, you should contact your Loan Officer.

Daniele

All times are GMT - 7 Hours

Page 1 of 1