Interested in borrowing from your home equity? Since the cash can be used for anything--home improvements, vacation, shopping spree, medical bills--it's a choice many folks turn to when they need money fast. But is it really a good idea? That depends. There are some pros and cons to a Home Equity Loan, and it's important to weigh both sides before making a decision.
PROS
Tax deductible interest: In most cases (it varies from state to state) the interest you pay on a Home Equity Loan is tax deductible at the end of the year. This added perk can help lower your tax bill, and it's one of the reasons many people refer to a Home Equity Loan as a "good" loan.
Low interest rate: In general, Home Equity Loans have relatively low interest rates compared to other types of loans, such as auto loans or personal loans. In fact, the rates are usually about half of what you'd expect to pay for a personal loan from a bank.
Easy to get approval: Even if your credit is not-so-great, chances are it'll be easy for you to get approved for this loan. That's because Home Equity Loans borrow from an asset you already own--the equity in your home.
CONS
Not always available: You must own your own home to qualify for this loan. Moreover, you must also have equity in your home, meaning your house must be valued at more than you currently owe on it.
The house is collateral: Your house is the collateral for the loan. So if there comes a time when you can't make your monthly payments, the lender can take your home away from you.
There may be better deals: Be sure to shop around before getting a Home Equity Loan. Special deals may mean a lower cost for you, such as offers from car financiers for zero percent financing.
Although a Home Equity Loan is a fairly inexpensive loan with tax perks, they're not right for everyone. Before making the decision to borrow against your home equity, be sure to carefully consider the pros and the cons.
View our recommended home equity loan companies online.
Also, check out our recommended 100% mortgage refinance lenders online, or view our recommended fast payday loan lenders online.
