Mortgage / Equity

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Home Equity Line of Credit Mortgage

Although a home equity line of credit and a mortgage are different products, it is possible get a financial product that combines a home equity line of credit and a mortgage.

A mortgage is a loan secured by a piece of real estate it is usually used for the purchase of real estate such as homes. Mortgages are always provide a fixed amount of money and are usually paid off over a period of years. Lenders usually charge interest rates on a mortgage; the interest rates are how the lenders make their money in a mortgage.

A line of credit is an agreement between a lender and a borrower. Under this agreement the borrower has access to a set amount of credit that they can use at any time. A home equity line of credit is secured by the equity in a home.

The equity in a home is the difference between the value of the home and the principal of the mortgage. If a home’s value exceeds the amount of the mortgage, the homeowner has equity available. The amount of equity available determines the amount of the home equity line of credit

Home Equity Line of Credit Mortgage

A home equity line of credit is a mortgage to which a line of credit is attached. When a homeowner gets this product they are issued a home equity line of credit when they take out their mortgage.

The advantage to this product is that the homeowner has a line of credit they can use for future expenses such as remodeling or home repairs. Some lenders will use the home equity line of credit to pay off other debts such as credit card balances. The homeowner only pays what they want on the equity line of credit and when they will use it.

To get a home equity line of credit mortgage, a homeowner will have to have a house that is worth more than it is mortgaged for.  If the amount of the mortgage is worth less than the house, the homeowner will not be able to get a home equity line of credit.

How to Get a Home Equity Line of Credit Mortgage

The way to get a home equity line of credit mortgage is to ask for one when you apply for a mortgage. Most lenders will make these products available to those who qualify for them.

By typing the term home equity line credit mortgage into a search engine a homeowner can locate lenders that specialize in this product. There are many lenders that make such mortgages available.

A homeowner should read the agreement that comes with is product carefully to avoid nasty surprises. Some lenders will have clauses that enable them to adjust or increase the interest rate on the home equity line of credit which can increase lending rates.

Comparing several different home equity line of credit mortgage offers can help a borrower get a good interest rate. Doing an exhaustive search for such products can also help a homeowner save money.

Using a Home Equity Line of Credit Mortgage

A homeowner should never treat a home equity line of credit mortgage like a credit card. The line of credit on such an agreement should never be used for consumer spending such as groceries or luxury goods. Instead it should only be used for home related expenses or emergencies.

Homeowners should remember that these products were created to finance home repairs and remodeling not everyday purchases. Limiting the use of such lines of credit can help a home owner avoid foreclosure.