You may be wondering if a home equity line of credit could be the right funding source for your family. Perhaps you have upcoming expenses like college or your daughter's wedding, or maybe your family has grown and you need to add on another bedroom or bathroom. The equity you have built up in your home may provide the needed money you need to accomplish these and more, by establishing a home equity line of credit.
Home equity lines of credit are revolving credit lines that you can use over a period of five to twenty-five years. You can use the entire line upfront when you are approved for your home equity line of credit, or you can spend as you have a need, over the course of the line.
How Much Can I Get?
To establish your home equity line of credit, your lending institution will take into consideration: the appraised value of your home, the amount you have paid on your current mortgage, your credit score, and your employment situation, including your income, to establish your ability to repay your credit line. Based upon these factors, your lender will offer you a line of credit. Typically, a home equity line of credit is 75% of the home's appraised value, minus the amount that is still owed on the home. So if your original mortgage was $ 200,000, your home equity line of credit would be $ 150,000, minus the amount that you still owe. If, for instance, you owe $ 100,000 on your mortgage in this situation, your home equity credit line would be $ 50,000. You can ask for more or less than this amount, depending on your situation or needs.
Save At Tax Time
Home equity lines of credit are not only great ways to pay for things you need, they also may qualify you for tax deductions when you file your income taxes. In fact, most borrowers who itemize deductions are able to deduct 100% of the interest on home equity lines of credit that are $ 100,000 or less. This tax savings can greatly offset the cost of borrowing money on your home's equity versus taking out a traditional loan.
Apply Online For Added Savings
More now than ever, borrowers are reaping the benefits of applying for their home equity line of credit online via the Internet with reputable lenders. Online lenders often offer special promotions to secure your business when you are shopping for a home equity line of credit.
For instance, online lenders may charge you no application fee, or may offer to refund any application fees that you might incur at closing, which can save you several hundred dollars. Or these special lenders may charge no appraisal fee, which traditional banks tack on. Other lenders may offer you home equity lines of credit that bear no monthly maintenance fee or check fee for using your credit line. There are other incentives available, depending on your lender, which makes getting your home equity line of credit online the most convenient, yet inexpensive, method.