Low Mortgage Rates for Smart Loan Shoppers
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Low Mortgage Rates for Smart Loan Shoppers |
Home Equity Loans Offer Debt Escape RouteBy Joe Taylor Jr.CMR Columnist If you've got poor credit, but you own a house, a home equity loan could help you get out of debt and improve your credit rating. Experts predict that home equity loan rates will remain low for the near future. If you're considering a home equity line of credit, now is an ideal time. Home equity loans allow you to use the equity you've built in your house to get a second loan. Equity builds by making payments toward the principal on your mortgage. Your home equity also grows when your home's value appreciates. Home equity lines of credit work much like credit cards, authorizing you to withdraw money or consolidate debts. The Fundamentals of Home Equity LoansIf getting out of debt is your goal, the best way to use a home equity loan is to use the money to pay off higher interest debts, such as credit cards. This makes sense financially when you consider that now you could secure a HELOC for a home equity loan rate of less than 10 percent, while many credit card companies charge much higher interest rates. You also can use your HELOC to pay for non-recurring expenses, such as a large medical bill or a college tuition payment, that you otherwise may have charged on a credit card.Because a home equity loan is easy to use, it's tempting to spend the money on luxury items or vacations. Your HELOC will serve you best, however, if you manage your spending and apply the money to costlier debt. With current home equity loan rates so low, your monthly debt payments should decrease overall. Taking advantage of home equity loan rates could put a major dent in your debt. Source Federal Trade Commission About the Author Joe Taylor Jr. coaches musicians, entrepreneurs, and other adults that want to shift their careers. He holds a Bachelor of Science in Communications from Ithaca College. © 2007 CMR. All rights reserved. |