There are times in everyone’s lives that they are faced with expenses that are unavoidable and that they have no way of meeting. This can be very stressful. However, if you have equity in your home, you can take advantage of it through a Home Equity Line of Credit.Releasing capital through a Home Equity Line of Credit starts with the valuation or appraisal of the property. Consumers can regularly borrow up to ninety percent of the appraised value of the property less the balance owed on the mortgage. For example, if your house is appraised at $400,000 and you owe $200,000, you would be able to borrow $160,000 on a Home Equity Line of Credit.A line of credit represents the amount of money available for a borrower to use as they need it. It isn’t like a traditional loan that is paid to the borrower in a lump sum – you only use the credit you need when you need it, thus limiting interest costs and allowing you to control cash flow.A home equity credit line offers flexibility and generally lower interest rates than other loans. However, there are risks. Attracted by low interest rates, many borrowers decide to consolidate their high interest debts without ensuring that the low interest rate is locked in. After an initial period of an introductory low interest rate, some banks put the rates up. It is very important that consumers read the documentation very carefully before signing the dotted line.The three most important things banks look at when deciding to give someone a loan of this type, are the levels of existing debt, collateral, ability to pay and credit history. These three factors combine to influence the amount you can borrow and the interest rate you will be charged.If you have a poor credit history, you will not necessarily be denied a line of credit, however, you will have to pay a higher interest rate and agree to extra provisions.Collateral refers directly to the equity in the property. If you default on payments, the lender will repossess the property. Your ability to pay the loan is also important.If a lender thinks your expenses are already too high for you to be able to commit to additional repayments, they will decline giving you a loan despite the equity in your home and otherwise good history.A home equity line of credit is definitely worth considering when you are faced with major expenses and do not have the ready cash. College fees, legal fees, medical bills all need to be paid and sometimes, they can confront us when we can least afford them. Using your home equity is a reasonable way to fund the unavoidable and somewhat unexpected expenses that can, at times, confront us.Go to a company that can get you a variety of quotes from Lending Institutions and save your money.
