Home Equity Credit Lines & Home Equity Loans
Home-Equity-Loans-123.com
You may be asking yourself what the difference is between these
two forms of lending and which best suits your needs. Whereas
home equity credit lines allow you to draw from a pre-qualified
amount whenever you like, a home equity loan - also known as a
traditional second mortgage loan - allows you to draw a
predetermined amount to be entirely paid back within a designated
time period according to a payment schedule. If you need an
exact amount of money to be used for a detailed project such as
having your kitchen refurbished, your ideal choice would be to apply
for a home equity loan, rather than a credit line.
If you still feel like you need more information regarding your
decision, you should also examine and compare the costs and APR's
associated with credit lines and home equity loans. Keep in
the mind that comparing the APR's alone will not suffice since they
are calculated with unlike variables.
-
For calculating the APR of home
equity loans, variables like points, finance charges, and interest
rates are considered.
-
For calculating the APR of home
equity credit lines, only the periodic interest rate is
considered.
The above information was obtained
from various sources published by the Federal Reserve Board and
Office of Thrift Supervision.
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