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THE COSTS & FEES OF HOME EQUITY LOANS / LINES OF CREDIT
A home equity loan is one of the easiest ways to borrow money. These types of loans offer favorable interest rates (in comparison to credit cards and other loan types). Home equity loan interest rates are also tax deductible, whereas credit card interest rates and most loans are not. There are many different types of home equity loans. Getting one that offers the lowest rates and fees takes knowledge. Below are some tips that will help find the right home equity loan for your needs.

Costs
Interest rates are the largest cots associated with home equity loans. It is important to understand that the APR, otherwise known as the annual percentage rate, is different for home equity loans and equity lines of credit. Equity loans have fixed interest rates while lines of credit have variable rates. The APR of an equity line of credit is determined based upon the loan's interest rate. Whereas the APR of a home equity loan usually includes the cost of initiating the loan. Obviously these factors mean that there are big differences in cost when comparing these two types of loans.

Obviously, the longer you utilize the loan, the more money you are going to pay in interest. Therefore, if you can pay off your loan early, you should! Keep in mind that it is possible that a fee may be imposed as a result of settling your loan early.

Fees
As mentioned, interest is the largest cost associated with home equity loans. However, it is not the only cost. The fees of home equity loans and lines of credit are similar to those of regular mortgages, i.e. closing costs, attorney fees, title search, insurance, paperwork preparation. You will also have to pay appraisal fees to determine the market value of your property. Additional fees also include, application fees for loan processing, points and an annual loan maintenance fee.

When utilizing a home equity line of credit, it is likely that you will have to pay a transaction fee every time you withdraw money. You may even have to pay an inactivity fee if you do not use any of your credit line for a specific amount of time.

Why apply for an equity loan with Star Loan Services?
We offer a variety of loan programs for every need! You don't need perfect credit in order to achieve approval! In fact, we can help you secure your equity loan or line of credit even if you have bad credit or experienced bankruptcy! Learn more about the different types of equity loans or lines of credit we offer. Or apply now for one of equity products!

 


 


        

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