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Monday, October 06, 2014

Home equity line of credit

A line of credit, secured by a property, that allows owners to tap into their home’s equity

You can get a line of credit equal to your home’s equity that works like your checking account or credit card. Equity is the difference between the value of your home and the amount you owe on your mortgage.
It’s flexible, so, if your home equity is $20,000, you can withdraw at will up to this amount simply by writing a check.

Note that you’ll have restrictions on how much you can withdraw at one time. You only pay interest on what you borrow and your credit limit is restored as you pay back what you owe. A home equity line of credit typically stays open for 10 years. Once it closes, you normally have 10 to 15 years to pay back what you owe.

The added bonus is that the interest you pay can be deducted from your taxes. But this isn’t free money, if you can’t repay the credit line you could risk losing your home.
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