Is Home Equity Line Of Credit Tax-Deductible? - If you looking for a low interest line of credit, consider a home equity line of credit. The interest is tax deductible. It has become popular for people to pay off their credit card debt with the money from a home equity loan, since interest rates are much lower than credit card interest rates.
The home equity line of credit is a revolving line of credit. There are no fixed payments or fixed time period in which the loan amount must be paid back. You are only required to make the minimum payment every month.
Also, you are only responsible for the amount you borrow. Very often, this credit line is a convenient mean of immediate cash; however, you are NOT obligated to borrow the whole amount. The amount is based on a specific percentage of your home's value. Depending on your lender, it could vary from 75% - 85% of property appraisal less the amount still owed on the mortgage.
For example:
Also, you are only responsible for the amount you borrow. Very often, this credit line is a convenient mean of immediate cash; however, you are NOT obligated to borrow the whole amount. The amount is based on a specific percentage of your home's value. Depending on your lender, it could vary from 75% - 85% of property appraisal less the amount still owed on the mortgage.
For example:
- Property Appraisal: $500,000
- 75% of Appraisal: $375,000
- Balance of Mortgage: $325,000
- Home Equity Line: $ 50,000 (75% of Appraisal – Balance of Mortgage)
Taking out a home equity loan is a simple application that processes in a few short weeks. You will receive checks that you write out as your own. There is sometimes a minimum required for each check.
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