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line of credit or home equity loan?

Discussion in 'Money & Finance Forum' started by LarryD, Jul 10, 2006.

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  1. Jul 10, 2006 at 12:30 PM #1
    LarryD

    LarryD autodidact polymath

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    we decided to stay in the house we've got, so we need to do some work -- mostly landscaping. maybe add a pool (though i'm pushing to be the only people with a lazy river constructed in their back yard). we'd pay off some credit cards while we're at it.

    what's best to finance this? a line of credit or home equity loan?

    anyone have any experience here?
     
  2. Jul 10, 2006 at 12:35 PM #2
    Ace13

    Ace13 Full Access Member

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    I've always heard that a loan looks better on your credit record. I've heard folks don't like seeing an open line of credit on your record. But I ain't a banker.
     
  3. Jul 10, 2006 at 12:37 PM #3
    meatpile

    meatpile 7-9

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    Cash!

    :trophy:
     
  4. Jul 10, 2006 at 12:38 PM #4
    VA49er

    VA49er Full Access Member

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    Whatever you do get a fixed rate vehicle. Most lines of credit are variable rate, but there are a few out there where you can lock in.
     
  5. Jul 10, 2006 at 12:39 PM #5
    LarryD

    LarryD autodidact polymath

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    well, yeah.
     
  6. Jul 10, 2006 at 1:04 PM #6
    The Brain

    The Brain Defiler of Cornflakes

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    PM Freakshow. I think he's a loan officer.
     
  7. Jul 10, 2006 at 1:24 PM #7
    Freakshow

    Freakshow Fuck you guys.

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    2 VERY different animals. On the home equity line you are only paying on what you borrowed. If you take out a $50,000 line, you only pay on what is being used...once it's repaid, you can use it again. The payments are generally interest only for 5,10, or 15 year periods. The downside???? They are attached to prime...prime was in the low 4's a couple of years back...now it's 8.25%.

    Fixed loans are generally principal + interest...The rate is fixed...but you take the whole lump out at closing....and begin paying on it.
     
  8. Jul 10, 2006 at 1:59 PM #8
    LarryD

    LarryD autodidact polymath

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    boooooooooo
     
  9. Jul 10, 2006 at 2:18 PM #9
    HardHarry

    HardHarry Rebel with a 401(k)

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    Don't forget about the tax advantage of a HELOC Larry. Deducting interest is nice.
     
  10. Jul 10, 2006 at 3:13 PM #10
    Freakshow

    Freakshow Fuck you guys.

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    Of course the interest on the fixed rate second is treated the same as a HELOC...
     
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