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Unformatted text preview: ing – If “teaser rates” are offered, the annual percentage rate (APR) must be disclosed. WHEN YOUR HOME IS ON THE LINE
The ease of mortgaging one's home to finance consumer spending can lead to excesses which jeopardize the security of the home. To help warn consumers about this danger, The Board of Governors of the Federal Reserve System has published the booklet “When Your Home is on the Line: What You Should Know About Home Equity Lines of Credit.” The following is quoted from that booklet. WHAT YOU SHOULD KNOW ABOUT HOME EQUITY LINES OF CREDIT
More and more lenders are offering home equity lines of credit. By using the equity in your home, you may qualify for a sizable amount of credit, available for use when and how you please, at an interest rate that is relatively low. Furthermore, under the tax law–depending on your specific Situation – you may be allowed to deduct the interest because the debt is secured by your home. If you are in the market for credit, a home equity plan may be right for you or perhaps another form of credit would be better. Before making this decision, you should weigh carefully the costs of a home equity line against the benefits. Shop for the credit terms that best meet your borrowing needs without posing undue financial risk. And, remember, failure to repay the loan could mean the loss of your home. 15-8 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 15: REFINANCING OR NOT AND CHOOSING A LENDER
WHAT IS A HOME EQUITY LINE OF CREDIT?
A home equity line is a form of revolving credit in which your home serves as collateral. Because the home is likely to be a consumer's largest asset, many homeowners use their credit lines only for major items such as education, home improvements, or medical bills and not for day–to–day expenses. With a home equity line, you will be approved for a specific amount of credit–your credit limit – meaning the maximu...
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- Spring '10