Mortgage / Equity

Equity
Home Equity
Mortgage
Equity Line of Credit Information

Most people are familiar with mortgages and how they work but most homeowners know little or nothing about equity lines of credit.

This means that locating equity line of credit information should be the first step that average people need to take. Fortunately it’s very easy to find equity line of credit information online. There are many excellent websites that can educate you about equity line of credit.

Learning the basic equity line of credit information before you seek a line of credit can save you thousands of dollars. If you know what an equity line of credit is and how to use it you can avoid getting a loan or mortgage you don’t need and paying thousands of dollars in unnecessary interest.

Basic Equity Line of Credit Information

A line of credit is not a loan instead it is an agreement in which a lender makes a certain amount of credit available to you. The difference between a line of credit and a loan or mortgage is that you are not given a set amount of money you are given a certain amount of credit. You can decide whether you use the credit or not.

An equity line of credit is a line of credit secured by the equity in a piece of property such as your home. On real estate the amount of equity is determined by the difference between the amount of your mortgage and the value of your property. If your property is valued at $100,000 and it’s mortgaged for $70,000 you have $30,000 worth of equity available.

Most equity lines of credit give you an amount of credit that is a percentage of the equity usually around 80%. This means that if you have $30,000 in equity your line of credit would be $24,000.

The lender makes its money by charging interest on the line of credit. The interest rate on a home equity line of credit is usually similar to that charged on mortgages. The interest rate is determined by your geographic location, (your state and community) and your credit rating. People with excellent or good credit usually pay a lower interest rate. People with a bad or poor credit rating usually pay a higher interest rate.

Finding Equity Line of Credit Information 

The place to search for equity line of credit information is online. There are many excellent websites that help educate average people about equity lines of credit. Government websites provide good information and they have the added advantage that they have no interest in selling you an equity line of credit.

One of the best is run by the Federal Reserve which contains descriptions of home equity lines of credit and explains how they work.  This site provides an excellent description of lines of credit written with the average person in mind. This information can be found at http://www.federalreserve.gov/Pubs/equity/equity_english.htm#equity

The Federal Trade Commission or FTC also has a lot of good equity line of credit information available at its website. http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea02.shtm

Commercial websites like www.bankrate.com can tell you how much lines of credit will cost and what you can qualify. These websites are good for making comparisons and making a final decision.

Be Leery of Information

Always consider the source of equity line of credit information before making a decision based upon it. Remember that most of the websites out there are created and maintained by lenders who make their money when they get you to use their products.

This means that some of these lenders may not be giving you all the information you need or telling you the whole story. Use several sources of equity line of credit information and get as much knowledge as you can before making a decision. A little research now can save you thousands of dollars in the future.