What to Look for in a Home Equity Line of Credit

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When looking for a home equity line of credit, consider the repayment period, the interest rate offered on the loan and the projected income over the life of the loan. Make sure the lending company cannot change the rate on a home equity loan without notification by considering advice from a financial adviser in this free video on home equity loans.

Part of the Video Series: Investments & Money Management Tips
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Are you considering borrowing money against your house? Hi this is Roger Groh at Groh Asset Management. If you are, you may be considering doing that through a home equity line of credit. What are some things to think about prior to making that transaction? Number one would be the repayment period. Number two would be the interest rate and then number three is your projected income over the life of the loan. What advantages are there in borrowing against your house? Well the interest that you paid may be deductible. You'll have to check with your lawyer or tax planner to ascertain whether that is true or not and it depends upon where you live. Also you want to be sure that if the value of your house goes down, that the company that gave you the money doesn't have the right to automatically foreclose against you. Two big critical points, is it necessarily cheaper to borrow through home equity? Maybe not but if the interest rate is deductible perhaps after tax is cheaper. One other thing you'll want to be sure that the bank or loan company doesn't have the right to change the rate that you pay on your loan without telling you first. How do you tell? Well look at the loan document or prospectus prior to doing any dealing. If you don't understand it give it to your lawyer and ask them to explain it to you. Hope that helps. Be careful. I'm Roger Groh at Groh Asset. Thank you very much for spending time with me.

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