Equity Loan Rates: Ready Credit

2007-03-08 10:33:40

( Financial )



Equity loan rates are the interest rates that are charged on top of your outstanding debt in an equity loan.

An equity loan is a loan taken out based on the appraised value of your property that will be used as collateral for the loan. It is actually more similar to a revolving line of credit that you can avail of anytime there is a need for additional funds on your part.

FUNDS FOR THE ASKING

Unlike a mortgage though where you borrow a lump sum from a lending company and use your asset as pawn or security, an equity line is a pre-approved amount that the bank offers which you may avail of in one go or borrow as needed. It is more like a flexible loan that is there for the asking.

As a form of financial service rendered by banks and financial institutions, an equity loan has corresponding equity loan rates. However compared to ordinary debts such as credit cards and loans, equity loan rates are lower because this type of flexible loan presents lower risks for the lender since it is secured by the borrower’s property. If at any time the borrower fails to make good on his payment obligations, then the lending company has the right to impound the property in question.

WHEN CASH IS NEEDED

Having an equity loan made available to you is an advantage because you have a ready source of money should an urgent need for cash arise. The lower equity loan rates encourage you to make good use of the credit line.

You may use the funds for student loan refinancing to assist your children as they go into college. Or if they are finished with school, you may take an equity loan for the purpose of a college loan consolidation to help your children start their career life with a clean financial slate.

While an equity line is based on the value of your property, the equity loan rates will be based only on the amount that you actually take out from the credit line. Of course you will only pay for what you have actually borrowed from the line, regardless of how high the credit line is.


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