A home equity loan is a good way to borrow money for two main reasons. First, the interest rate is usually one of the lowest loan rates a borrower can get. Second, the interest you pay on the loan is usually tax deductible. But taking out a home equity loan also means the lender can take possession of the home if the loan isn’t repaid. This is why some people decide to not borrow against their home, and may decide to take out a personal loan. But for many borrowers, a home equity loan can be the best loan option. Your best loan option is the loan that best meets your needs.
Keep in mind that lending companies are businesses and the more clients they have, the more money they can make. For that reason, you should know about teaser rates. Teaser rates are often advertised by lenders to win your business. Teaser rates are low rates for an initial time period. If you see a deal on a home equity loan that looks enticing, talk to the lender and find out specifics. If a home equity loan has a teaser rate, find out what will change after that initial time period and how much it will cost you.
Also, don’t forget that like student loans, personal loans and mortgages, home equity loans may involve paying closing costs. Keep your eye out for lenders who are offering low or no closing costs, as well as competitive rates and terms. And remember, the longer it takes to repay a home equity loan, the more money it costs, so make a plan and stick to it, so you can make the most of your home equity.