by Catherine Rein
(last updated November 13, 2009)
There are times when you might need large amounts of cash, for home improvements or maybe for emergency bills. Using part of your home's equity might be the right choice. There are advantages for using home-equity over other forms of debt such as credit cards. Often the interest paid on the loan is tax deductible.
As you evaluate all the options for tapping your home's equity, keep in mind that you should keep at least a 20% cushion of equity in your home. This will allow you to qualify for lower interest rates, avoid private mortgage insurance (PMI) and other associated fees. Here are three main ways for tapping you home's equity:
Similar to getting your first mortgage, the rate you are offered on a home-equity loan or home-equity line of credit is dependent on your credit score. The higher your credit score the easier it is to shop for a home loan. The lowest interest rates are available to borrowers with credit scores of 760 or better. Lower credit scores will likely result in higher interest rates and higher fees.
You should consult a tax professional for the tax implications of taking a home-equity loan. These types of loans are often thought of as being better than credit card debt, because you can deduct the interest. This is not always the case.
Amortization schedules may be daunting to think about, especially when you realize it deals with mortgages and interest ...Discover More
Teens have a number of ways to make money, both traditional and newer online job opportunities. You can find work through ...Discover More
Many people don't realize that they could have money sitting out there that they don't know about. With just a little bit ...Discover More