If you have been reading this blog for some time, you have probably learned that there are some serious benefits to a home equity loan. Surprisingly, it’s still an avenue that many people have left untraveled. It might be the most proven yet underused way for homeowners to access money in times of need.
When you want a loan, most people have several options. Lines of credit, credit cards and even borrowing from someone they know. Each has benefits and drawbacks but none have the specific benefits of a home equity loan or line of credit.
A Home Equity Loan is like Enjoying the Perks of your Investment
For most, their home is their greatest asset. To be able to leverage your investment to access a loan is to leverage your own personal equity. The process comes with a greatest level of ease. For years, you pay your mortgage every month, so why not have it work for you when you need it? This is one of the benefits to purchasing instead of renting.
Since these are secured loans, approval is easier and you will be more trusted in the eyes of the lender.
A Home Equity Loan Allows you to Potentially Borrow More
The way a home equity loan works is you get to borrow against whatever you have invested into your home. If the value of your home is $500,000 and you’ve paid $200,000 of your mortgage, then you can borrow $200,000.
Not many loans give you access to that kind of money. Your home equity affords you greater borrowing ability.
You’ll Probably Enjoy a Lower Interest Rate
Home equity loans generally yield a lower interest rate, which means you can enjoy more of the money while you pay more towards the principle. With interest rates being the biggest detriment to borrowing, this is obviously a huge boon and should be a deciding factor.
There’s lots of options and each situation is different. Consider a home equity loan and see if it’s the best option for your life.