Loans and Lines of credit based on equity are fantastic tools for obtaining inexpensive financing. Apart from home mortgage loans, home equity financial products are probably the cheapest source of funds a homeowner can find. This is one of the reasons why these loans and lines of credit are so popular, however, another reason is the versatility this type of loans provide for consumers allowing them to use home equity loans or home equity lines of credit for many different purposes. Let?s analyze some of them:
Home Repairs and Home Improvements
Almost half of the people that take financial products based on equity use the money to make necessary or ornamental improvements to their properties. And this particular use has boosted since lenders started to promote their secured loans as home improvement loans on the internet with simple online applications and fast approval processes. The availability of funds for home improvements has increased dramatically the last few years and since the interests on these loans may be tax deductible depending on your situation and the type of project being undertaken, the costs associated with home improvement and home repairs financing are rather low compared to other forms of financing.
Moreover, if you manage to make repairs or additions that can add up to the value of the property, you might as well end up making a great deal. There are people that purchase properties in poor conditions, make the necessary improvements and repairs by resorting to an equity line of credit and then sell the property at a much better price or rent it thus generating interesting revenue. The costs associated to this form of financing are usually low enough to be compensated when used for these purposes.
Cancel Debt And Consolidate
These products are also a fantastic alternative and can be used for consolidating debt. With the money obtained from one of these loans or lines of credit you can cancel all your outstanding unsecured debt, like credit card debt, payday loans and unsecured personal loans. By consolidating you will be able to reduce your debts? monthly payments and unify them into a single lower installment you will not have problems to afford. Remember also that as opposed to unsecured debt, secured loans and secured lines of credit?s interests are tax deductible which can save you a lot of money when the time for paying taxes arrives.
Purchase a Vehicle or Second Property
These loans can also be used for purchasing a car, motorcycle or RV when your credit score will not allow you to get approved for a vehicle loan. Moreover, since these loans carry low interest rates, it is an excellent way for getting vehicle finance at a discount rate and save thousands on interests. Also, many people use the money from home equity loans to purchase a second property, usually for vacations. In this case, the money is usually used in combination with the mortgage loan to avoid PMI by making a suitable down payment.
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