Home equity loans can be very useful, and often serve many purposes. If you can find a great rate, taking out such a loan can be more beneficial than any other type of loan or line of credit. In fact, if your home equity credit is large enough, you can typically use it to pay off other debts that have higher interest rates.
If this sounds good to you, the next step is to find home equity loan information so you can peruse your options. There are many benefits to taking out a home equity line of credit or loan, among them:
1. They typically carry lower interest rates than credit cards or non-secured debt.
2. You can use your home equity money to start a business, or make improvements to your current company.
3. You can also consolidate your debt by paying it off and making one large payment to the bank each month to pay off your home equity loan.
4. They offer tax savings, as you can deduct mortgage interest each year.
Action Steps
The best contacts and resources to help you get it done
Find out your home equity value
The first step to obtaining a home equity loan is to find out if the amount of equity you have available would even be worth taking out. If you recently bought your house, or it is a bad real estate market, you should not take out a loan, as you probably have no equity. Equity is figured out by subtracting the amount you owe on the property from what it is currently worth.
I recommend: Figure out your equity and how much you can borrow with an online calculator, such as the one at
Interest.com, which simply requires you to type in how much you owe on your home mortgage loan and the appraised market value. Visit
HouseValues.com if you want to find out your approximate value for free.
Compare home equity rates online
Prior to committing to any loans, you should compare rates with different companies online. Obtaining the lowest interest rate possible is worth the extra time it takes to gather home equity information. There are several sites available online that allow you to find local rates.
I recommend: Bankrate.com allows you to find current available interest rates, while
MSN Money provides a way to compare rates by city and state.
Visit your bank to get home equity loan rate information
Check out the local branch of your bank to find out what they can do for you. Banks typically offer interest rate discounts for account-holders, and usually have home loan specialists on hand to answer any questions.
I recommend: Chase offers a plan with no closing costs, while
Wells Fargo features rate discounts for customers.
Tips & Tactics
Helpful advice for making the most of this Guide
- Be prepared to pay fees when you obtain a home equity loan, such as closing costs. If you cannot afford them, look for a bank that does not require such fees.
The official source of Home Equity Loans is the Home Equity Loans page at Business.com
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