Why do my Home Equity Line of Credit payments change Month-to-Month? |
|
Answer:
A home equity line of credit is a second mortgage Getting approved is relatively easy. Since the borrower’s property secures the loan, lenders are more apt to approve a request. In the event of default, the home equity lender can take action and claim the borrower’s home as repayment. A home equity line of credit is slightly different from a home equity loan. With a home equity loan, the borrower receives a one-time payout and the loan rate is usually fixed. Thus, payments are predictable and remain the same. On the other hand, a home equity line of credit is a revolving credit account, and most have adjustable rates. As a result, payments can fluctuate on a monthly basis. Once approved for this type of home equity option, homeowners gain access to an open line of credit. They can withdraw money on an “as-needed basis,” and use the funds for a variety of purposes. If you want to keep your monthly payments low, it is best to borrow small amounts and repay the balance quickly. Since home equity lines of credit have a draw period of up to ten years, borrowers are free to pay back the money over time. Trackback(0)
Comments (0)
 Write comment
You must be logged in to post a comment. Join for free or Login.
|
TrackBack URI for this entry
Subscribe to this comment's feed
© QandAs.com, All rights reserved.
Save or Share