Flexibility: A borrower can access money repeatedly
and in varying amounts, as needed.
cost: Once open, it operates like a credit card in terms of annual fees.
Can carry person through tough times: After a job loss, a homeowner
can still borrow from the home equity line to span the gap until the next job.
Generally it carries a lower rate than a home equity loan, and will often have
a low introductory rate for a certain period of time.
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A college education: For a borrower who has
children at staggered ages and will need different amounts of tuition money at
different times. A homeowner can get cash for the first amount, pay down the balance
in time for the next child, then borrow again without having to take out and close
on yet another loan.
Unexpected home repairs:
Before a sale, a potential buyer might require that work be completed.
Fixed payments: A borrower knows what the monthly payments will be for the life
of the loan.
Fixed rate: Most loans carry a
fixed interest rate rather than a variable rate, which is standard for home equity
Debt consolidation: Eliminating
higher-rate debt, such as that on multiple credit cards. Transferring the balances
to a home equity loan can produce huge savings, and a borrower also avoids the
temptation that a home equity line presents to keep running up balances.
Home improvements: If a homeowner knows the exact cost, for example, of adding
a room in terms of material and labor, then getting a fixed amount makes sense.