5 Points to Consider Before Tapping Your Home Equity Keg

by Site Manager on October 31, 2014

home-equity-keg5 Points to Consider Before Tapping Your Home Equity Keg

The housing bust has certainly recovered over the recent years, allowing people to tap their home equity keg to account for debts, renovations as well as other items. Due to the increase in home equity credit until June 30 last year, the most immediate question to address is how to decide if home equity loan or keg loan is ideal for you. You might like to consider 5 things before tapping your home equity keg. Read on to know what these points are:

Time
When you sign up for a 30 year loan for a 30 months, your payment date stays the same regardless of when you pay. However, when you go for the refinancing option, the clock automatically resets allowing you some flexibility in your pay period. This means that if you wish to reduce your 30 year loan to a 15 year loan, then you will have to pay more amount on a monthly basis while make a total of less payments altogether.

Rates
The rates of the home equity loan have been consistently low over the past few years. However, they are expected to rise in the coming years as the Federal Reserve can predict some volatile changes in the rates. This means that if you borrowed loan, you can still benefit from the low rates that were fixed at the time of the agreement. Nonetheless, if you were to go for refinancing, then you will be in trouble as you are going to end up paying higher rates than the home equity loan agreement.

Costs
The prices that you will be paying for a home equity loan is certainly going to be lower than all the processing fees that you will be charged when you consider refinancing. This is because the refinancing companies will be charging you the underwriting costs which would mean that you should get ready to give up most of your money to them. Furthermore, if you sign up for a home equity loan, then you wouldn’t have to worry about the extra costs as they will be saved. Most companies do not even charge you any other costs to begin with so you can save yourself any trouble.

Tax benefits
On a home equity loan, you can definitely enjoy some tax deductions. This means that you have a limit of up to 100,000 mortgage reduction on equity loan which is not really an option when you consider refinancing.

What is the need?
Home equity loan should only be considered when it will add value to your property. For instance if your home equity loan could be used for renovation, then it is a great idea as it will increase you property value. Thus, you must consider this option only if it is going to be of use.

Now that you know enough about home equity loan and its impact on your property, it will be safe to decide what to do while taking this option. You do not want to get caught in th hassle of loans and therefore, your decision should largely be based on logical reasoning rather than merely the need of the hour.

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