August 1, 2004
(NAPSI)-Need some extra cash? You don't have to look any further than your own front door. A house isn't just a home, it's an investment.
With housing appreciating in value, and ownership at an all-time high, many people are taking advantage of home equity financing.
"When used for the right reasons, a home equity loan or line of credit can be an intelligent way to manage important purchases and major
expenses, particularly when faced with an unexpected financial need," said David Herpers, director of consumer affairs at Amerisave Mortgage,
a leading online mortgage company.
Home equity financing offers many advantages such as low interest costs and tax savings. Unlike credit-card debt, for example, the interest
on the first $100,000 borrowed on a home equity line of credit is typically tax-deductible. Borrowers may withdraw up to a certain amount
and pay interest only on the amount withdrawn.
Many people aren't aware of the money saving and tax advantages that home equity financing can provide. In fact, Herpers says it's often
the smartest way to meet an unexpected expense, pay for home improvements, or consolidate debt. However, taking advantage of your largest
asset-your home-is a major decision and not to be taken lightly.
Consider why you are borrowing money. Is it for your child's college tuition or to build an addition to your house? Are you consolidating
your debts? Those are good reasons to use home equity financing. But think twice about using home equity to splurge on a vacation or wardrobe.
In general, it's best to use home equity financing to reduce your interest costs or to make investments that will generate future income
or increase the value of your assets.
You should also think about the size of your monthly payments and the length of your loan. Use your lender as a resource for information
on penalty fees, terms, credit lines and interest rates. There's a wealth of information on the Internet, including Amerisave.com, that
you can use to educate yourself.
Also remember there is competition in the home equity line market. So shop around. Rates on these loans can vary by as much as two
percentage points. Take note of closing costs and usage fees. There are two primary home equity options for consumers: home equity term
loans and home equity lines of credit (HELOC).
A HELOC allows you to borrow money up to the credit limit. The interest rate is adjustable and varies monthly with changes in index rate.
A HELOC allows you to borrow only the amount you need, when you need it, unlike a loan that commits you to a monthly payment.
A home-equity line can be a good way to pay for home renovations, college tuition or other bills that don't come due all at once.
It can also serve as an insurance policy that can help meet unexpected expenses.
When you obtain a home equity loan, you receive the entire loan amount as a lump sum. Payments are fixed for the life of the loan and
interest rate remains the same. The interest is also tax-deductible in most cases, making this loan an excellent choice for one-time
large planned expenses or to consolidate debts.
Amerisave is one of the nation's leading and fastest-growing online mortgage companies, serving customers in all 50 states and DC via its Web site,
www.amerisave.com. Amerisave's mission is to provide the best rates from top banks for a variety of home financing needs. The company
provides customers the ability to obtain the most competitive rates instantly via the Web. Amerisave offers a $300 guarantee that
consumers will not find a mortgage loan at lower cost in rates and fees.
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