What are the advantages and disadvantages of the different ways I can borrow from my homes equity?
Home equity loans are more stable since they have a fixed interest rate and payments. The also have less fees and charges than home equity lines of credit. The amount of money that you will pay in interest is fixed and this is very advantageous to those who may lack financial discipline. Home equity loans are suited to borrowing large sums in which the entire amount is needed up front. Home equity lines of credit are useful when you need money at intervals or you do not know how much you will pay. Home equity lines of credit are also useful when you borrow a small amount and pay it back quickly. Two use of a home equity line of credit might be to pay a college tuition or for an open-ended repair job. Home equity lines of credit can result in an undesirable balloon payment if only minimum or partial payments are made. Home equity lines of credit should not be used for debt consolidation. Home equity lines of credit generally have a lower interest rate than fixed-rate home equity loans.
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