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Home Equitity Line of Credit

How to use a home equity line of credit to your advantage

By Jeanni Brosius, CEO, Brosius Young Communications
If you're just starting a business or you want to invest in additional assets for your business and need cash to do so, consider a home equity line of credit loan. This will give you access to a line of credit that you can utilize for what you need when you need it.

Make sure your business can support your home equity line of credit loan payments because your home is used as collateral when you receive a home equity line of credit.

Three things you should know about a home equity line of credit are:
  1. A home equity line of credit is based on how much equity you have in your home.
  2. The interest on your home equity line of credit loan is tax deductible.
  3. Check with more than one mortgage company to compare interest rates to get the lowest home equity line of credit.

 

Rev up your business with a home equity line of credit

Have your home appraised to see how much equity you have before applying for a line of credit for home equity. This line of credit is usually easily accessible and can be beneficial to your business. Shop around for rates, then visit your own bank to see if you can get a better rate.
Try: Get quotes from several mortgage lenders such as Mortgage Loan or Lending Tree.

Get all of the home equity line of credit information you can

Normally, you pay interest only on what you actually use with a home equity line of credit. If you have a $25,000 line of credit, and you use $10,000, you'll only pay interest on the $10,000. Make sure you obtain all of the line of credit information available such as interest rates, payments, penalties and fees before you put your house on the line,
Try: Find current interest rates on home equity line of credit loans at Bankrate. Calculate your payments with a mortgage calculator at Calculator-Rates before you apply so you can get an idea on how to budget your new payment.

It's all in a day's rate

Find a lender that will offer you a fixed interest rate for your home equity line of credit. Apply for your loan before you actually need it when the rates are lower. This will ensure you have your line of credit to help you through the hungrier times.
Try: Check into getting a business loan with a fixed interest rate at Countrywide.  Compare fixed interest rates with various lenders at Loan dot com.

 

  • Consider a home equity line of credit loan only if you can't obtain a business loan.
  • Since you're putting your home on the line with a HELOC loan, you should take all possible measures to make sure your business is able to pay the loan back.
  • After your get a home equity line of credit loan to use for your business needs, and your business profits, you can use the line of credit as collateral to obtain a regular business loan and clear your house of the second mortgage.

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