Should You Refinance Your Home Loan, Or Take Out A Home Equity Line Of Credit?  

Article by Adam O'Connor, Las Vegas Home Loans 

With the continued increases in interest rates on credit cards, home equity loans have become an increasingly popular way for consumers to borrow money. Home equity loans have allowed millions of Americans to take control of their debt. This type of loan offers several advantages over other types of consumer loans.

Borrowing for Business?

Does it make sense to borrow against your personal residence to fund business activities? On the one hand, if your residence has around 20 percent equity and 80 percent loan outstanding on its value, then this strategy should not be considered under any circumstances. If, on the other hand, you are a longer time homeowner with more than 50 percent of your home's value as equity, borrowing against your home can work to provide capital for your business. (The Las Vegas market in particular, has seen dramatic increases in home prices, and in people taking out home equity lines of credit to leverage that increase in home value. The market is still very good, you can just now start to find foreclosures. To view the Vegas market, book a las vegas flight, and start getting familiar with the area.)

Using Your Home To Buy Doodads?

Unfortunately, millions of Americans are using home equity loans and lines of credit for splurges. Bankers love it when you borrow against your house, and Americans are buying lenders' pitches that our homes are a good source of funds for whatever our hearts desire, from Super Bowl tickets to exotic vacations to investments in stocks and bonds.

An Equity Line of Credit Can Be A Real Asset!

Handled with care, home equity credit lines can be a brilliant way to improve financial flexibility, provide readily available cash reserves for emergencies, or pay for large expenses that have irregular payment schedules, such as college tuition. Shop around and you will be able to find a home equity line of credit that suits you.

Even with the ease and convenience of lines of credit, people are still finding reasons to refinance: to get rid of mortgage insurance, to trim payments or lock in a low rate by switching types of loans, or to extract cash from a house that has grown in value. One of the biggest reasons to refinance is to switch from a fixed-rate loan to an adjustable rate loan.

Refinancing can be worthwhile, but it does not make good financial sense for everyone. A general rule is that refinancing becomes worth your while if the current interest rate on your mortgage is at least two percentage points higher than the prevailing market rate. There are other considerations; too, such as how long you plan to stay in the house.

Article Edited by: Michelle O'Connor, Apartment Rentals Las Vegas, Nevada

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