Home Equity

A Guide to Home Equity Lines of Credit

It seems as though you can't turn on the television or read the newspaper without seeing some advertisement for lenders offering home equity loans or lines of credit. Perhaps you aren't really in the market for a loan, but after seeing all of the commercials and ads have begun to wonder about getting a line of credit. Maybe you want to do some home improvements, or are looking for a way to pay for some of the extra expenses that come up in your life.

It's important that you understand exactly what home equity lines of credit are and exactly how they work before you begin looking for one, however... after all, you don't want to get in over your head without even knowing how you got there.

Defining Home Equity Lines of Credit

The first thing that you need to know when working with home equity lines of credit is exactly what they are. As the name implies, a home equity line of credit is an amount of credit granted by a bank or other financial institution that uses the equity that you have built up in your home or other real estate as security to guarantee that anything charged to the line of credit will be repaid. This line of credit acts just like any other credit card or credit line, with the only major exception being the nature of the security used for the credit line.

Common Uses of Home Equity Lines of Credit

Since home equity is usually quite high in value, the amount of credit that can be established in a credit line based upon it also tends to be quite high. This can open individuals up to credit limits that they have never had before, which they can use for a variety of different purposes. Many individuals who take out credit lines based upon the equity in their house or other real estate use the new credit for larger projects, such as home improvements or debt repayment.

These lines of credit might also be used to pay for college or other educational expenses for individuals or their children, or may simply be used as the means for financing the vacation that a person has always wanted to take but has never really had the money.

Obviously, the choice is up to the homeowner... but it's important to keep in mind that whatever is borrowed against a home equity line of credit will have to be repaid with interest.

Applying for a Home Equity Line of Credit

A home equity line of credit can be applied for at any bank or a variety of non-traditional or specialty lenders who deal with home equity. Even most online lenders are able to grant this type of credit line. Treat the credit line application as though it were a mortgage or equity loan, and take the time to shop around for the best interest rate and credit terms.

Compare the various quotes that you receive from various banks and lenders, making sure that you carefully consider the benefits and drawbacks of the various credit terms that you are offered.

When you submit your final application to the bank or lender of your choice, it should be because you have decided that it is the best overall deal among all of the offers that you received instead of simply being the offer that had the lowest interest rate.

You may freely reprint this article provided the following author's biography (including the live URL link) remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

Home Equity News:

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Home equity loans drying up for some - Personal finance- msnbc.com
Some homeowners are finding that even with great credit and 20 percent or more home equity, getting a line of credit on that equity can be difficult or impossible.
Equity in Americans? homes falls to historic low - Mortgage Mess ...
The equity Americans have in their most important asset ? their homes ? has dropped to its lowest level since the end of World War II.
Use of home equity hits a four-year low - Real estate- msnbc.com
The amount of money Americans pulled out of their homes is at a four-year low as homeowners battle falling home values and stricter standards among lenders, Freddie Mac said ...
Morgan Stanley to freeze home-equity lines - Mortgage Mess- msnbc.com
Morgan Stanley told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines, according to a news report.
Late payments for home equity loans rise - Real estate- msnbc.com
Late payments on home equity loans climbed to a 1½-year high in the opening quarter of this year, while delinquencies on credit card bills fell, painting a mixed picture of how ...
Late payments rise on home-equity loans - Stocks & economy- msnbc.com
Late payments on certain auto and home equity loans climbed in the final quarter of last year, while delinquencies on credit card bills largely held steady, suggesting some U.S ...
BofA tackling debt worries by cutting home-equity lines - Top Stories ...
Bank of America Corp. is tightening up its home-equity lending business, turning down applications and turning off credit lines in struggling housing markets.
Should I get a home equity credit line? - Answer desk- msnbc.com
Free money In this week's video Answer Desk, msnbc.com's John W. Schoen has some advice on how to avoid giving the government more of your money than you need to.
How to tell if now is the time to refinance - Personal finance- msnbc ...
You have at least 10 percent equity in your home and aren?t FHA-eligible. To get good rates, you?ll need to have equity in the home. In most markets, 10 percent equity is a ...
Morgan Stanley to freeze home-equity lines - Today Technology & Money ...
Morgan Stanley told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines, according to a news report. ... Morgan Stanley ...

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