Plans for a Home Equity Line of Credit (HELOC)

Filed Under ( , , , ) by Joe Somebody on Monday, March 7, 2011

Some think this is just another way to get deep into debt but I look at a home equity line of credit as a chance to purchase big ticket items and spread that purchase out over a couple months. With a HELOC you can get fixed or low APR. If I were to use a visa or mastercard with 22% interest. I would be so screwed.

The lowest fixed rate HELOC that I have found was in the 5s. Thats just above my mortgage loan. Thats dirt cheap for a credit card and thats not even an introductary offer. Thas for a period of 5 years. Most HELOC are based on a fixed term. Usualy a number of years. 5-10.

It doesnt take long to find a home equity line of credit. CitiBank, Wells Fargo, Countrywide, Chase all offer them. Key things to watch for is the term length and the interest rate. The fixed rate is what makes these so popular. You dont have to worry about an APR (adjustable percentage rate).

Another beughty of it is that you can choose how much you want to spend. You can use as little or as much of the credit line as you want. When you compare to a home equity loan this is by far better. With the home equity loan you are paying for the entire amount. Plus they usually have a hiring closing cost. While a HELOC you can get the closing cost credited. Push for that too.

Home equity line of credit vs a home equity loan. Credit all the way. You are only paying for what you use. You dont have to take the lump sum amount. This will allow you to pay less interest in the long hall. Remember that. Always look for the best interest rates when shopping. Getting a lowest fixed rate HELOC will pay devidends year after year.

(11) Comments

Comments:

11 Responses to “Plans for a Home Equity Line of Credit (HELOC)”

  1. Anonymous on March 7, 2011 at 5:54 AM #

    Well tahnks for the info, I didn't know anything about equity

  2. MacAttack on March 7, 2011 at 9:00 AM #

    I hope i never get into huge credit =|

  3. Jay on March 7, 2011 at 2:28 PM #

    good info, what's the usual interest rates on HELOC?

  4. Astronomy Pirate on March 7, 2011 at 4:15 PM #

    So what kind of stuff do you buy with that line of credit? I guess pretty much new big ticket items to fill your new home?

  5. Joe Somebody on March 7, 2011 at 5:57 PM #

    @Jay- Right now with good credit you can get in the low 5s.

    @Astro Pirate- Its handy for big ticket items but its also handy for renovations. You can purchase all the materials for a bathroom for example.

  6. Tasos on March 7, 2011 at 6:04 PM #

    good thing I'm in the UK...

  7. Josh on March 7, 2011 at 8:31 PM #

    This stuff makes me nervious

  8. Thuganomics on March 7, 2011 at 8:43 PM #

    there's gotta be some downsides to this

  9. Obi-wan Mikenobi on March 8, 2011 at 4:51 AM #

    Good luck with that, let me know how it works out.

  10. Patti D. on March 8, 2011 at 6:18 AM #

    good thing I'm in the UK too, lol.

  11. Anonymous on March 8, 2011 at 10:38 AM #

    im trying to stay out of debt.

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