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Home Equity Loans: Alternative Lines of Credit

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The juxtaposition of increasing interest rates and declining mortgage rates encourages borrowers to seek lines of credit other than home equity loans. Nowadays, home owners often make interest payments on their home equity loans that are higher than those they are paying on their mortgage.In response, lenders are suggesting that clients borrow more than the amount remaining on their home mortgage and putting the surplus money towards paying for their line of credit.Unfortunately, this plan may not be for everyone. Say you are looking to sell your home within the next two to three years. The closing costs will almost certainly outweigh the amount you save from lower payments. However, one may consider a fixed rate loan in this situation if he/she has a home equity loan because in the long run, it may be more cost efficient considering the expectancy of future increases in interest rates.It is beneficial to keep your mortgage and home equity loan separate because it forces you to pay off the equity loan so that it doesn’t become a burden down the line.You may freely reprint this article provided the following author’s biography (including the live URL link) remains intact:

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