Getting a loan against your property can really help you out if you are in need of some extra money, but not all mortgage loans are the same. Maybe you need money for your tuition, medical expenses, or to make improvements on your home. Keep reading to find out if the home equity line of credit (HELOC) is right for you. Also, if you are looking for a horse property for sale in Colorado, contact Colorado Horse Property today and speak with one of our horse-person realtors.
A home equity line of credit is a mortgage loan. However, it is used on an as-needed basis. Your bank/lender will approve a very specific amount for you based on the equity in your home. The loan amount is available to you with no interest some or all the money is used up. Of course when the money is paid back, the line of credit is available again. It’s that simple!
What is a Home Equity Line of Credit?
Repayments can vary. Lenders require you to pay interest only or payments of principal and interest. The specifics of the repayment will depend on your bank/lender and you should make sure you understand the repayment agreement with them before continuing with the mortgage loan. One of the great things about this type of mortgage loan is that the interest on a HELOC may be tax deductible. Your tax advisor will be able to let you know about your situation.
You should not compare the APR on a HELOC with the APR on a standard loan. They are wildly different. The APR on a HELOC is the interest rate. It does not reflect points or other upfront costs, as the APR on standard loans does. It seems odd at first, having lenders to show the interest rate on a HELOC twice, but it’s a way to protect borrowers.
