DH Expert Guides

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Guide to Home Equity Loans and Lines of Credit

Why get a home equity loan?

With the equity in your home, you can get the financing you need to do a number of things including paying for college or consolidating bills. All across the country, home values are on the rise increasing the amount available for you to get in a loan. Banks look at the loan to value ratio of your home or difference between the value of your home and amount still owed to determine how much you could get in a loan. Lenders have different criteria that they check to see if you are credit worthy and can get a home equity loan so you should contact them for more information.

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What are the benefits of a home equity loan?

Getting a home equity loan may be a good move for you. With this type of loan you can free up the cash in your home for a variety of projects you may have. If you choose to improve your home with the funds, you may find that you can get a tax deduction for the interest you pay. In addition, a major advantage from doing home improvements is that you may find that you have increased the overall value of your home. This will later make it easier to sell your home or merely increase the amount of equity you have available to you.

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Are there tax benefits to having a home equity loan?

A home equity loan can be used to provide funding for a number of different activities. You may be looking to improve your home thereby increasing its value or maybe you just want to consolidate some bills. Whatever your reason there may be valuable tax benefits when you use the equity in your home. You should check with a tax adviser to see if you qualify for any benefits when you file your annual tax return.

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What is a home equity line of credit?

With a home equity line of credit, the bank essentially is making funds available to you when you need it. It works much like a credit card except you are using your home as collateral. At times you could owe nothing and other times you may have the full amount extended to you. These are often financed as variable credit loans so be sure you understand how and when the interest rate can adjust. An advantage to getting a line of credit rather than a loan is that the money is available to you whenever you need it rather than getting a lump sum at the beginning.

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