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When getting a home equalty line of credit, how quickly do you recieve it & is that the best option when needi |
When getting a home equalty line of credit, how quickly do you recieve it & is that the best option when needi depends when you set up appointment with the lawyer as you will receive funds that day . usually doesn't take very long , probably 2 weeks. HELOCs are pretty similar to what you went through with your first mortgage. It is generally complete in less than a month, but with a HELOC you don't receive the money (that would be a Home Equity Loan, or HEL). HELOCs usually work like a checking account where you write a check to whomever you want to pay and it is drawn from the HELOC. Then you get a bill from the HELOC lender. There are really three options if you need money. The first is the home equity loan (HEL). This is also called a second mortgage and works just like your first, except you get cash (ok, a check) at closing. Then you get a monthly bill. The advantages are that you usually lock in your interest rate and get money up front. The disadvantages are that you make two payments each month, interest rates on HELs are usually higher than 1st mortgage, and you can get yourself into trouble if you don't change your spending habits (see HELOC below). The second option is a Home Equity Line of Credit or HELOC. The advantage of this is you have credit available when you need it. The disadvantages are many. First, HELOCs typically have a higher interest rate than 1st mortgages, many have variable rates. Second, if you use the HELOC to pay off higher interest debt and don't change your spending habits (get rid of credit cards), you will wind up back in the same situation, but with TWO mortgage payments PLUS the credit card payments AND no way out. The third option is to re-finance your existing loan and take cash out to pay the debts. The advantage to this is that 1). you only make one mortgage payment and 2). the interest rate is lower than a 2nd. The disadvantages are that 1). you can do the same thing as with the a HEL or HELOC and get yourself in trouble again and 2). the new interest rate on your mortgage MAY be higher than your current interest rate. If you want to use a HELOC as an emergency fund, this is NOT a good idea. The lender will requalify you every year and if you are unemployed, they could raise your rate, just when you need the money the most. The BEST solution is to ALWAYS have moeny in savings for emergencies. They WILL happen so it's better to be prepared. If you have more questions, feel free to email me. http://www.daveramsey.com Don't be normal. Normal is $8000 in debt and no savings Debt-free is the way to be. |
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