The Risks Involved With A Seattle Home Equity Line of Credit
A Seattle home equity line of credit, commonly known as HELOC, is simply a loan taken against your home. It works very similar to a credit card only it is a secured loan. You can access credit up to the value of the equity in your home.
While this kind of loan offers many advantages, there are risks and disadvantages that you’ll have to keep in mind. Many people who have taken this kind of loan have benefited greatly, while others have lost greatly.
Advantages of HELOC
There are a number of advantages of taking out a HELOC. These include:
If you are looking for finances to start or expand your business or invest is a profitable venture, you can take advantage of a Seattle home equity line of credit, to access financing.
The interest rate is charged on the actual amount of money you access, not the entire value of your equity. You have the option between fixed or variable interest, depending on what works best for you.
When it comes to a HELOC, repayment focus is on the interest accrued first, for up to 15 years. It is only after this that the principle becomes payable.
Even with these advantages, you must consider the disadvantage of HELOC. Some of these disadvantages are:
Once the loan is in place, the lender can and probably will hike up the repayments you need to make each month. Make sure that you are able to meet these hiked repayments before taking the loan.
• Credit Ratings
Your credit rating can be affected adversely if you fall behind on payments or make some payments late. You must therefore plan your finances very carefully before jumping into a HELOC. At the worst, you can lose your home if you fall badly behind on repayments.
Take note of these advantages and disadvantages before applying for a Seattle home equity line of credit.
For more information on buying or selling real estate in and around Seattle contact Adrian Willanger, Coldwell Banker Danforth & Associates.