Home Equity Line Of Credit – Is There A Prepayment Penalty?
For the most part, homeowners are familiar with home equity loans and home equity lines of credit. With either option, you are able to acquire funds for emergencies, home improvement projects, etc. Getting a line of credit and using your homes equity to your advantage is a huge benefit to owning a home. However, before completing the credit application, homeowners should carefully read and understand the credit line agreement.
How Does a Home Equity Line of Credit Work?
A home equity line of credit is a credit line that is based on your homes equity. For example, if you owe $80,000 on a $120,000 mortgage, your homes equity is $40,000. When applying for a home equity line of credit, the lender will approve you for a credit line up to the amount of your homes equity. Lines of credit are slightly different than home equity loans. While home equity loans are also based on your homes equity, homeowners obtain a lump sum of money upon approval of their loan application. These loans are generally based on a fixed rate, whereas lines of credit have variable rates.
How to Obtain Funds with a...
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