When Should You Have A Home Equity Line Of Credit In Place ?  

If you have any unexpected expenses or are looking for a way to pay for something major, then you should have a home equity line of credit in place. It has been seen that this kind of credit has lower rate of interest when compared to unsecured loans and credit cards and it is the perfect source of funding for people who have no money saved up.

Depending on which lender you go to, the terms of the home equity line of credit will vary. If you are using this kind of credit, then you do not have to establish the line of credit until you have to use it. The fact that a lender does not require a borrower to make a minimum withdrawal is what makes this option of funding so attractive. Once the line of credit is established, the money is available for the person whenever he or she wants to use it.

In order to give this kind of credit, the lender will check the debt to income ratio. So, only people with low debts and relatively okay income will qualify for this kind of loan. For instance, if a person has a serious medical issue that prevents the person from working for some time, he or she may not qualify for this kind of loan as the person may suffer from income loss because of the medical issue. However, if the person was prudent enough to set up a line of credit before the illness occurred, then he or she can withdraw funds even if the medical issue crops up later and causes loss of income due to lost working days.

In places where there is a risk of hurricanes, floods or bad weather, it is prudent to take out a line of credit on your home equity. When natural disaster strikes, insurance companies will take time to assess the claims and disburse the funds. In such circumstances, a person will not have access to money for his or her needs. Also, because of the natural disaster ruining or causing damage to the house, the home equity will diminish and it will not be possible for the person to set up a line of credit then. But, if the person had established the line of credit earlier, he or she would be able to make withdrawals to help them tide over until the insurance claims are disbursed.

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When Should You Have A Home Equity Line Of Credit In Place

 

 

    
 

Real Estate 101 :

Benefits Of Equity Line Of Credit      If you own a home and have been making your mortgage payments regularly, you must have built equity on your home. Of course, the longer you make the mortgage payments, the more equity is built on the property. People who need money can look towards something known as equity line of credit. This money can be used for a variety of things like home improvement, paying for college tuition, or even investing in a business venture. More..

 


 

 

 
   
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