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Posts Tagged ‘credit line’

The Best Way to Obtain a Home Equity Line of Credit

February 16th, 2010 by Matthew C. Keegan | 1 Comment | Filed in Consumer Financing, Home Financing

A home equity line of credit (HELOC) is type of revolving credit. When selecting a HELOC, your residence serves as collateral for your loan. If you have accumulated equity in your home and have a good credit rating, a HELOC can be easy to obtain. But first, you will want to get organized and create a strategy to help you secure financing through a financial institution.

Shop carefully for a line of credit.

Consult with your accountant. You may think that a particular, low-rate HELOC may be the most effective approach for you, nevertheless your accountant may not share your view. For some property owners the tax benefits of a HELOC may not be advantageous while a home equity loan (HEL) or other funding arrangement may be worthwhile over time. Talk to your financial adviser to come up with a borrowing strategy with the best tax implications.

Evaluate your needs. Your financial adviser will probably persuade you to borrow only what you may need. What this means is creating a spending plan outlining how much money to access. Even though a HELOC does not require you to tap all of your available funds, you may want to consider a line only large enough to pay for the money necessary for refurbishments or other work you need to have done on your house.

Check around for lines of credit. Your financial institution and your mortgage broker are two resources to seek out your HELOC. You will also want to examine their particular rates and compare those with what other lenders have to offer which means broadening your search accordingly. The majority of lines of credit offer adjustable interest rates; compare those rates along with fees and closing costs to figure out the best HELOC for you. Have potential lenders explain the terms of their contracts; negotiate for a lower rate or fees wherever possible.

Apply for a HELOC. Once you have found the HELOC you want, then apply for it. Your lender will obtain your credit information before granting approval and may ask for other documentation prior to closing.

Close on your credit line. Once you are satisfied with the terms of your line of credit, then arrange with your lender to close the deal. Consult with your financial adviser as needed.

Considerations

The Truth in Lending Act (TLA) may allow you to cancel your HELOC within three business days if you change your mind. Your contract should explain the procedure for invoking a rescission.

Caution

Be careful of lines of credit with an initial teaser rate. You may pay more for your HELOC over the long term once the rate resets.

Resources

The Federal Reserve Board: What You Should Know About Home Equity Lines of Credit

    Bankrate: 4 steps to take before borrowing


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      Avoid These So-Called Credit Card Deals

      March 10th, 2009 by Matthew C. Keegan | 6 Comments | Filed in Credit Cards

      Over the past several months you may have noticed that the number of credit card offers peppering your mailbox has dropped. That is because credit card companies have tightened their lending restrictions and in some case are axing customers.

      New Offers On The Way?

      credit cardsHowever, don’t be surprised if the number of offers begins to increase, something I’ve taken note of personally these past few weeks. With quite a few banks now taking federal taxpayer money, they’re in the mood to lend again, but they really haven’t eased up on their restrictions. This means that if you have very good credit, you should see additional offers. Not so with the credit challenged consumer.

      5 Flags When Considering A New Credit Card

      Not every credit card offer received is worth the paper that it is printed on. As a matter of fact, some offers are a sheer horror. With scores of offers out there, why would anyone choose anything less than the best plan? Let’s take a look at some of the credit card offers you’ll really want to avoid.

      Annual Fee – With so many cards out there not charging an annual fee, why would anyone choose one that does? For business cards or consumer cards offering a lot of perks, a reasonable annual fee is okay. All the same, if you are being charged $50 annually for a card with a credit line of $500 or $1000 then you are being ripped off.

      Application Fee – Paying an application fee is pathetic. The only cards requiring such a precondition are those for people with awful credit. If you have bad credit, the last thing you need is another credit card. Expect to pay a high interest rate for the “advantage” of shopping with one of these cards.

      Low Interest Rate, Low Credit Line – If you are offered a low interest rate credit card what good is it if the credit line is too low? How very nice of them to offer to you a 2% opening APR, but with a credit line of $500 or less you’ll have a hard time making good use of the card.

      Penalty APRs – Be on the look out for that credit card offer broadcasting a low rate. It could double or triple if you have just one late payment. Do you think that 3.9% is an appealing rate? You’ll quickly rethink that if your rate resets to 21.9% or more!

      Bad Deal Convenience Checks – If you idled your credit card a few months ago, do not be surprised if you receive a heavier than normal envelope offering you “convenience checks” to pay off expenses. These checks are not just convenient, but costly. Be careful, you could be hit up with the cash advance rate to borrow money and/or get slapped with a fee to use each check. Stay with those deals where fees are not assessed and borrowing rates are reasonable; familiarize yourself with your user’s agreement.

      For certain, most credit card offers are sufficient but you need to know what you are getting before agreeing to a card that just may not be advantageous to you. Consider obtaining copies of your credit report too before applying for a new card.


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