East West Mortgage wants there borrowers to be well aware of the difference between a home equity loan and a home equity line of credit.
Home Equity Loan
A more suitable choice when you need money for a one-time specific purpose is a home equity loan. A home equity loan carries a higher interest rate than a first mortgage. Borrowers can choose from either adjustable rate which fluctuates according to the market rates, or fixed rates that allows you to budget a set payment monthly instead of worrying about the cost increasing. Also with a home equity loan you have to keep in mind that you have a closing cost to consider. Your home is the collateral with a home equity loan. Home equity loan has a term that can be as short as a year or as long as 30 years.
Home Equity Line Of Credit
This is where you get to withdraw money over and over again for your, and the interest you pay is tax-deductible. In some ways a home equity line of credit is similar to a credit card. The amount you can borrow is determined by your income, debts, the value of your home, how much you still owe on your mortgage and your credit history. If you want to whether a home equity line of credit is the right choice for you, you should know that a home equity line of credit is good if you need to meet ongoing cash needs. A home equity line of credit carries a higher interest rate than a first mortgage. Your home is the collateral with a home equity line of credit. This loan usually lasts from a 10 to 20 year period.
You can come and speak to one of our knowledgeable home mortgage lenders for more details or information.
