Home Equity Line of Credit Loans
The line of credit home loan (also called a home equity line of credit) allows homeowners to borrow against the amount of equity built up in their property. Essentially this loan functions like a credit card. However, your property is on the line should you default on the loan.
Those with unpredictable income find this to be a good option. Money is available to property owners when they need it, and they do not need to use the credit if their finances are good. Some investors find this sort of a good way to make sure money is available when they need it
Pros of Line of Credit Home Loans
- The loan gives the opportunity to invest by having funds available
- Borrowers will pay less interest on a line of credit loan than on credit cards or other personal loans
Cons of Line of Credit Home Loans
- The loan can be a problem for undisciplined borrowers and eventually lead to a reduction in equity
- Interest rates are usually higher than the standard rates
- Lenders look at this loan as maxed out and it counts against you during attempts to borrow funds.