Home Loan Consolidation - Interest Only Loans

Interest Only Home Equity Line of Credit

The availability of Interest Only Home Equity Credit Lines has drawn the interests of many who seek to benefit from the value of their homes as well as those who plan on using the reduced repayments for other purposes, such as stock investments, or share trading. These interest only loans work best with an offset transactional account. The offset account reduces the interest you have to pay on the loan. So if you have a $500k loan and you have $200k in your offset account, you will only be charged interest on the difference (that is $300k).

Banks tend to offer the homeowner multiple ways to get an interest only loan. One bank for example has advertised the existence of a plan whereby the homeowner gives payments that cover the Prime plus 5% for five years. Then in the next ten years, the homeowner pays a floating variable interest rate, a rate that is determined by the Prime rate.

That same bank also offers an alternate way for obtaining an interest only home equity line of credit. Under this alternate procedure the homeowner pays 5.75% APR for one year. Then after that first year the homeowner faces an increase of 0.25% each year until the rate reaches 6.75% APR. In the sixth year of this particular line of credit the homeowner pays 6.65% every month until the credit line has been paid off.

The homeowner should also consider other approaches to a home equity line of credit. For example, some banks offer a draw period at the start of the period of the loan. During this draw period, the homeowner can withdraw funds for making advances, repaying advances or advancing the line of credit. The draw period is followed by a period of repayment.

Each type of home equity line of credit offers the homeowner a way to reap added benefits from the existing credit line. For example, the homeowner could choose to increase the insurance deductibles, knowing that a line of credit had been made available. The higher deductibles would guarantee a decrease in the premium payments on the insurance policy.

A home equity line of credit could also be used to buy discount credit cards at a store of the homeowner’s choosing. In addition, the possession of a home equity line of credit gives the homeowner the ability to make purchases with a Rewards credit card and to then pay the card payment with the check obtained through the credit line.

Once the homeowner has negotiated all of the intricacies of a home equity line of credit then that homeowner is ready to use multiple economic tactics in order to make more money from what he has available. He will be ready to prove the old saying: You have to have money to make money.

Local Home Loan and Mortgage Comparison by State

HomeLoanConsolidation.com offers you free instant local mortgage quotes and home loan comparison services in each and every US state. We offer discount mortgage rates in all of the states listed below, as well as useful information regarding home loans in each and every state: