While most everyone realizes the many benefits a home equity loan provides, fewer people understand what a home equity line of credit can do for you as well.A home equity line of credit is similar to a loan in many aspects. The total amount is based on the amount of equity you have built up in your home, and you can use the money for whatever you wish.Generally, the line of credit is based on the current prime lending rate, and whichever direction it moves, so does your credit line. Recently in the past couple of years there have been several increases in the prime. This is something to keep in mind when considering taking out new loan.A home equity line of credit gives you the ability to withdraw funds just like you would do with your regular credit card. This is another one of their big benefits; you have flexible payments. Unlike a standard loan in which you have a set payment schedule each month, a line of credit lets you make interest only payments is you desire.Another great benefit to a home equity line of credit is how it can help “bridge” the gap when you’re in between buying and selling your home. Here’s a good example.Let’s say you’re in the process of building your new home, but you’re still paying the mortgage on your current home. For whatever reason, it just hasn’t sold yet. Now, you’re asking yourself how can I possibly make mortgage payments on two homes? This is certainly not a good position to be in, but a home equity line of credit can be a major asset in helping you out here.Use the equity in your current home to pay, or finance the costs, on your new home. Then, when your current home sells, you’ll be able to get a conventional loan and pay off the short term credit line you used.This is just one example of how you can leverage the equity in your home to your favor. If you find yourself in a situation similar to this, it may be the solution you’re looking for.All Rights Reserved Worldwide. Reprint Rights: You may reprint this article as long as you leave all of the links active and do not edit the article in any way.
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