Mortgage / Equity

Home Equity
Equity Line of Credit Payment

Like a mortgage or an equity loan an equity line of credit should be paid off as quickly as possible.

The advantages to equity line of credit payment are considerable. Paying off an equity line of credit will decrease your debt load, increase the equity on your property and give you more spending money.

There is no reason not to pay off an equity line of credit as quickly as you can. The sooner you pay off your equity line of credit the better off you will be financially.

Advantages to Paying Off an Equity Line of Credit 

The biggest advantage to paying off an equity line of credit is that it increases the amount of equity you have in your home. Equity lines of credit are backed by the equity of a piece of property which is the amount by which the value of the property exceeds the mortgage principal. Increasing the amount of equity available increases the amount of credit available.

This means that those who pay equity lines of credit will be able to borrow more. It also increases their disposable income because they won’t have another payment to make or more interest accruing. This will give a person more money to spend and a better credit rating.

Having an open equity line of credit that you’ve paid off gives you a source of credit to cover emergency expenses such as repairs. This keeps you from using your savings or investment money to cover repair costs.

Why You Should Pay Your Equity Line of Credit Off

Equity line of credit payment will help you avoid foreclosure. Any unpaid equity lines of credit on your home will increase your chance of foreclosure because equity lines of are secured by your property. If you leave them unpaid for any length of time you will face foreclosure.

Another advantage to equity line of credit payment is that it can improve your credit rating. Paying off lines of credit can raise your credit rating which can increase your ability to borrow more.

It is also likely that your lender will give you more a higher equity line of credit if you pay off your equity line of credit promptly. Paying off the credit will make it easier for you to get mortgages, loans and further equity lines of credit in the future.

Methods of Equity Line of Credit Payment

The best method of equity line of credit payment is to use the online or electronic bill payment feature offered by your bank to make the payments. This sends a payment directly from your bank to your lender’s bank. It eliminates the hassle of mailing a check which can lead to delays and lost payments.

Always make sure you use electronic bill payment in which you have to schedule and send out a new payment each month. That gives you control over the payment and payment amount. So you will be able to confirm that the money is available in your account before making a payment.

Never sign up for automatic bill payment that allows the lender to take money of your account. That can lead to overdrawn accounts and overdraft fees.