Individuals and businesses that are searching for viable borrowing options to renovate residential properties can take advantage of home equity line of credit. However, before these people opt for such financial schemes, it is important for them to be aware of how they work. This will go a long way in helping them take a prudent decision on whether such loans can cater to their specific needs or whether they should look at other avenues.
A banker and real estate specialist who is a class apart
Steve Liefschultz is a popular banker and real estate expert from Minnesota in the United States. He is presently the Chief Executive Officer and Chairman of Equity Bank, a financial company that he owns, operates and manages in the area. His corporate enterprise specializes in providing investment lines of credit and viable real estate loans for entrepreneurs of small businesses and individuals in this region. This former lawyer and property broker holds the view that investing in real estate properties open up new avenues for his clients to enhance their shareholder value.
What is a home equity line of credit?
He explains that a home equity line of credit is form of financial advance that banks or other lending organizations offer individuals where the collateral for such loans is their residential property. Under this scheme, the lender approves the borrower’s application for a certain sum of money after taking into consideration a number of factors. The amount that this financier is willing offer the house owner depends on the appraisal value of property in question and on the amount, he/she owes on his/her current home mortgage. Residential owners use such real estate loans to meet certain medical, educational or property renovation expenses.
Advantages of home line of credit
This real estate expert goes on to explain the home equity line of credit has the following advantages for residential owners:
- Debt consolidation
House owners who opt for home equity line of credit usually have to pay higher interest rates than they would incur if they choose other mortgage loans. However, such expenses are much lower than what credit card companies charge their customers when they offer such financial aid. This implies that these individuals are able to repay such debts slowly over a longer period without having to struggle to cope with ever-increasing interest charges.
- Residential owners pay only interest charges
When it comes to making repaying charges on their equity home lines of credit, most financial institutions insist their clients pay on the interest amount every month. This is convenient for those individuals who are facing financial difficulties and can pay the principal amount when they are in a position to do so.
- Tax deduction
The Internal Revenue Service allows individuals to claim a tax deduction of the interest payment they makes on their home equity lines of credit against their residential property.
Steve Liefschultz says the above benefits make home equity lines of credit a suitable loan option for many residential owners.