Home Equity Loan Pros and Cons

Easy is quitting your job when you win the lottery or when you retire comfortably into the sunset! Hard, is the state of the general consumer in this ever confounding maze of financial demands placed upon us. Nonetheless, monetary strains will always create major demands for notes like the home equity loan, and analyzing this loan prior to obtaining it, is always indicated.

We all want to have stability in our bank accounts and life in general but balance is obviously becoming some sort of commodity and so many of us lack it in many aspects of our lives!

With that said, when we turn for relief from financial stress, we often look into one of our greatest assets, our house. As solid as the foundation on a new home, your equity is always there for you to tap into when times arise for extraction.

Home equity pros and cons though need to be analyzed prior to your acquisition because this note can be really helpful to some and very hurtful in the wrong hands! First, your rates on an equity loan are much cheaper than credit card rates and many times substantially lower.

Your rates are fixed so the lump sum you borrow has a rate that never changes via being locked at closing time. You can actually make money (a lot) if you select the right home improvements to invest your loan into. Usually, these are plumbing, landscaping, bathroom, and kitchen remodeling. Your home equity loan interest can be tax deductible but only on a percentage and not for every dollar.

Cons associated would be keeping yourself from utilizing the money for purposes other than what it was intended from the outset! Using it on investments that have depreciation rather than appreciation can hurt your monetary landscape. Expect not to be allowed to rent out your home as many lenders frown on this and fully disallow it in the terms of the agreement.

Regardless of your money situation, you can see that this loan can do wonders for your life and put you in a much better financial position overall. However, if you don’t have a genuine need in mind, or have problems with allocating funds appropriately, you may want to pass on this note altogether!