Equity Fixed-Rate Loan Vs. Line Of Credit
type should you choose?
The answer to this question
is seldom black and white. But there are some scenarios where the choice
Example 1-Fixed Expense
Your daughter has finally decided to get married and you need $7,000 to
pay for the wedding next month. You also don't want the roof of your house
to leak during the reception. And you need $3,000 to fix your roof, which
will take a week. You know exactly how much you need and both amounts
are due in full fairly quickly. If you don't have plans to borrow again,
a straight Home Equity Loan for $10,000 is more suited to your purpose.
Your son has decided to pursue a higher education; you'll need to pay
tuition at the beginning of each semester for the next four years (hopefully).
At the same time you've decided to remodel his room into the den you have
always wanted (a project that may never end). A Line of Credit is the
better choice. It gives you the flexibility to borrow only the amount
you need, when you need it. And if you borrow relatively small amounts
and pay back the principal in a reasonable amount of time, a line of credit
can cost less than a fixed rate home equity loan. Home Equity Loans can
be used to achieve almost any financial goal. Knowing which one you need
helps you make the right decision. Talking to a credit union representative
can make it a reality.