When you need some extra money, one of the ways you can get a loan is through a home equity loan. If you are a homeowner, using the equity in your home as collateral is nothing new. People have been taking out home equity loans for many years. And while it’s true that there is some element of risk involved since you are putting your house up in the deal, there are several benefits to home equity loans that you may not have heard about.
Low Interest Rates
Quite often, prospective borrowers get caught up in the amount of a loan or in worrying if they will even qualify at all. When these factors become your focus it’s easy to forget about interest rates, or to accept interest rates that are much higher than would be ideal. Keep in mind; those interest rates determine how much you’re going to pay back when it’s all over.
One of the big benefits of home equity loans is that they traditionally have a lower interest rate than other types of loans. It’s normal to find interest rates on home equity loans that are lower than 10 percent, while a typical credit card company would charge interest rate hovering closer to 20 percent.
Home equity loans are generally stable loans, which add to the borrower’s peace of mind. Loans have fixed interest rates that won’t fluctuate over the course of the loan. This makes it easier for a borrower to budget and to plan, adding to the overall financial stability of lending you money. With home equity loans, you borrow the money and the money is yours, then you make your fixed payments until it is paid back.
Great for ‘Lump Sum’ Projects
Home equity loans work wonderfully for ‘lump sum’ type projects or expenses where a one big sum of money is needed one time, but the effects will last for a long time. These may include things like a major home renovation or a new car. You will need a big sum to pull it off, but you’ll be enjoying your purchase long after you’re finished paying back the loan.
Effective Consolidation Tools
Since home equity loans are fixed and they do have low interest rates, they make effective tools for consolidating credit cards or other debts. If you lean toward this solution, make sure you look over the terms of the loan to ensure you’re really better off, and don’t pay off those cards without a solid plan. Taking a home equity loan to pay off credit cards, and then having the empty cards there tempting you isn’t going to help your situation at all.
Just because you have equity in your home doesn’t mean you have to use it in this way, but if you do and you find yourself in need of extra money, home equity loans do make sense for a lot of people. Fast Access Finance offers home equity loans to many customers, even if they have bad credit! Fill out our online form to see if you qualify for a home equity loan.