What are the advantages&disadvantages of a home equity line of credit?
Home equity lines of credit, because of the fact that they use as collateral a home’s value (equity), offer homeowners both advantages and disadvantages.Cash ValueDepending on credit status, income level and existing debt load, a home equity credit line can provide cash access up to 85 percent of the home’s assessed value minus the current mortgage. This is advantageous when applied toward home improvements.Interest Rates and Tax AdvantageHome equity credit lines can provide a homeowner with large amounts of cash at low interest rates. Also, home equity credit lines have potential tax advantages not applicable to other kinds of loans (consult a tax adviser).Variable Cash AccessMany home equity loans give you different ways to access your credit line. The credit line may offer cash access through credit cards, through checks, or through both checks and credit cards.Refinance-Related RiskConversely, certain situations can put your home at risk in association with these credit lines. An i
