"There’s benefits such as the interest rate is lower and also you have some tax benefits, but again you have to talk with your tax advisor on that," explained Linda Virtudes of Central Pacific Bank.
The way homeowners may want to use that available credit are varied.
"You could use the home equity line to consolidate loans, or possibly tuition, student tuition as well as renovating your home which would add value," said Virtudes.
Home renovation may not be the first thing that comes to mind when taking out a loan…but consider this.
"Well, renovation as I was saying, it does add value to your property but when you do renovate your home, want to consider a home equity loan, especially if you’re thinking about taking a lump sum out," said Virtudes.
And there is a difference between a home equity loan and a home equity line of credit. A home equity loan is sometimes referred to as a second mortgage.
"So there is a fixed payment that you pay through the term of the loan and the end, it’s paid off," Virtudes explained. "The home equity line, there is a variable rate and you only what you use on the line."
I wondered how you decide which equity path to take. Virtudes says the loan should for something major – she mentioned home renovation. The equity line is a bit different.
"A home equity line is a variable and you draw whenever you need to use it," Virtudes explained. "You can access it by writing a check and you’re only going to be on what you use on the line itself."
See the original article at: KHON2 Developing Stories
