The Risks Associated With a Home Equity Line of Credit

Must Read

Bad Credit Debt Consolidation – Debt Management Tool To Pay Off Debts Smoothly

Bad credit debt consolidation is the perfect remedy for you when you are in a financial dilemma due to...

Home Mortgage Refinance Loan Brokers

Home mortgage refinance is the process of taking a mortgage on the same property which was used as collateral...

Easy Debt Consolidation Techniques

Debt consolidation is easily achievable when you know the right steps to take. It will require a few phone...

Student Loan Debt Consolidation

The way that my debts have built up since college, it seems like I have been paying for the...

Canon EOS 60D, Reducing Red-Eye

When photographing people with an on-camera flash, one thing that we’ve all seen and would like to avoid is...

Nikon D7000, Using the Built-In Flash

There are going to be times when you have to turn to your camera’s built-in flash to get the...
Admin
test

To fully understand what a home equity line of credit or a HELOC is, you need to chunk this into two terms: home equity and line of credit.* Home equity – is the market value of your home less the total amount of debts that are associated with or registered to it.* Line of credit – also referred to as a credit line, it is an arrangement wherein a bank or a lender extends a specified amount of credit to a borrower for a certain period of time.Combining the two, you get the term “home equity line of credit” (obviously) which is a form of revolving credit and which takes your home equity as collateral. Anytime you need money, you can make use of – or in mortgage lingo, DRAW from – your credit line. Basically, a home equity line of credit works in the way a credit card does. As long as you don’t go beyond your credit limit, then you can continue to draw money for needs such as medical bills, tuition fees and home improvement expenses.Please note that using money from your home equity line of credit should be done sparingly. This should only be used for really important payments or purchases. Drawing money from your home equity line of credit to pay for everyday expenses is not a wise idea. This is because of the ultimate risk that’s associated with this financial option – as outlined below:The Ultimate Risk: ForeclosureIn this kind of financial option, non-payment of your dues could result to the foreclosure of your home, as is the case with other mortgages – Toronto or elsewhere. Therefore, you should make sure that you attend to your dues in a timely manner. Although you can only pay the “minimum,” it’s always a wiser idea to pay more than that. This will ensure that the amount for repayment will considerably get lower – and to assure that your monthly payments are not only used to cover for the interest rate.Other RisksNote that with a home equity line of credit, the “health” of your credit limit largely, if not entirely, depends on the market value of your home. If you lender senses that the value of your home significantly decreases or if they have sufficient reason to believe that you cannot keep up with your monthly payments, they may either freeze your account or reduce your credit limit.In both cases, you should talk with your lender. Ask them how you can restore your account. You should be able to prove to them that the value of your home has not considerably decreased. You should also show to them that you are still well in the way of being able to make the necessary payments on a regular basis. Your argument would bear more weight if you can show some proof. So provide documentation if you must.When talking doesn’t seem to solve the problem, then you may consider shopping for another line of credit. Of course, look for the best mortgage rate – Richmond Hill or elsewhere. With any luck, you can get an arrangement that allows you to pay off your original home equity line of credit with another one. And when some things still remain unclear, suit up and get help. Mortgage and credit professionals run aplenty and they’d be more than happy to be of service to you.Allegro Mortgages Corp. – Best Broker for All Your Financing Requirements
(416) 987-0008

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Digital Marketing for Beginners

Digital marketing for starter, Let to basic learning about connecting with your audience in the right place...

What are 7 things poor people do that the rich don’t?

1. poor people watch TV in which people read books how many hours you spend in front of the TV and when...

Top 18 best small business ideas for beginners starting

A small business can be frightening and requires plenty of careful planning there are many small business ideas which can be beneficial...

Summer that makes you happy

We saw were already here I've been thinking about some of the things. I used to do with my husband even though...

4 Point to helpful tips specifically for caregivers

What you need to take a vacation. I know it sounds impossible creative and try to make it work for you almost...

More Articles Like This