2.	Q. Should I choose a home equity loan, or a home equity line of credit?
	A. Before you obtain a new loan, you should consider all your options.
	A home equity loan is a lump-sum of money you receive. The loan generally has a fixed interest rate, which is usually slightly higher than a first mortgage interest rate. You start making payments on the loan as soon as you receive it, and once you pay it off, it’s gone. On the other hand, a home equity line of credit (HELOC), generally has a variable interest rate, sometimes with a pre-agreed ceiling or “cap.” You only access as much as you need, and make payments only on that amount. You can use the funds, pay them down, and then use them again. You only make payments, when you have drawn on the loan, and those payments are based on the interest rate at that time. The funds are generally available to you for a certain term. At the end of that term, if there is anything outstanding, you can either pay it off or roll it into another loan.
3.	Q. Why should I choose a home equity loan over, let’s say, a personal loan or cash advance on my credit card?
	A. In most cases, a home equity loan or line of credit carries a lower interest rate than secured credit cards and unsecured personal loans.
	The payment is lower, because the loan is secured by your house. Additionally, the interest on a home equity loan or line of credit may be tax deductible, up to $100,000, depending on your available equity. Consult your tax advisor to determine how much you could save.
4.	Q. But why shouldn’t I just refinance and pull cash out?
	A. To determine if you should refinance your home and pull additional cash out for expenses, you should look at the terms and conditions of your first mortgage.
	Is your current interest rate low? If the interest rate on your first mortgage is already low, and in line with current market rates, you probably don’t want to refinance in order to pull cash out. An exception to this might be if you currently have a 30-year mortgage, and you’ve owned your home for a long period of time. In that case, you may still save money by refinancing to a 15-year fixed mortgage, which usually has a lower rate than a 30-year mortgage. When considering your options, keep in mind you’ll need to factor in any pre-payment penalties your current first mortgage lender might charge, and remember refinancing generally involves higher closing costs. Additionally, if you pull cash out to pay off other debts, you are financing those debts for the period of your new loan.
5.	Q. How can I increase my chances of being matched with GetSmart lenders?
	A. You have a better chance of being matched with our lenders if you request a new loan of $100,000, or more.
	If you have equity in your home, you might consider using some of that equity to pay off higher interest debts or other expenses.

> Back