Equity Home Loans

Home equity loan or line of credit?

I have a house I bought two years ago that I would like to either take out a home equity loan or line of credit against. My credit score is around 620. What is the best way to go about doing this? How long does it take? I've got a 30 year fixed at a rate I can afford so I am ok in that regard.

Public Comments

1. With the market being flat or down in most areas, you don't have much equity from two years to present. What is driving the need to the HELOC? Other debt? or remodeling? if it's consumer debt, consider doing a debt snowball rather then extending the life of the debt out to 30 years! if remodeling I'd not go over 15 yrs.
2. With your credit score it will not be easy to get a good rate. Depending on how much equity you have in your home, you may not be able to get much either. To answer your question though, in the current economy, the line of credit would be your best option. Home equity loan rates are like mortgage rates and are based on the long term teasury notes. Because of inflation fears, these rates are not coming down and even rising. HELOC (line of credit) loan rates are based off the prime rate. This rate is influenced by short term rate changes like the on the Fed made ealier this week. These rates are much lower. If you must borrow against your house, then I would suggest the HELOC. However, I must advise you to be careful borrowing against your home. Evaluate your need and decide if it is worth putting your home at risk. Good Luck.
3. If you are a first time borrower of a home equity loan it is imperative that you have a checklist of essential questions that you need to ask each and every lender. The answers to these questions will provide a valuable reference to base your comparisons on. What’s the interest rate? Knowing this is crucial. The interest rate will determine<!--the monthly payment you will need to make. You also need to know if the interest rate is of a fixed or adjustable nature. Fixed rate implies that the monthly payments will remain constant, while an adjustable rate implies that rates will fluctuate depending on market conditions. http://best-loans.awardspace.com/homeloans.htm In adjustable rate, when will rates change? If your interest rate on the home equity loan is of the adjustable variety, you need to know three things: when the rate is going to change (that is under what conditions), how frequently will the rate change and what’s the average-->percentage by which the adjustable rate will change. What is the Annual Percentage Rate or APR? The APR on the home equity loan will determine the yearly payment you will need to make towards this.The higher the payment in terms of points, the lower is the interest rate.
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