Do you need cash to take care of bills and other expenses, and you’re considering a home equity loan (HEL)? By tapping into the equity of your home, you can receive a one-time payment that you’ll eventually need to pay back in full. Although a home equity loan can help get you out of a financial jam, it’s important to carefully weigh some of the pros and cons before making your final decision.
Pros of a home equity loan
Home equity loans can be an alluring option because they tend to offer lower interest rates than other types of loans, including credit cards. As such, if you are trying to overcome a financial crisis and you need to borrow money to do so, a home equity loan will usually save you money, when compared to other available options. The interest you’re paying may also potentially be tax-deductible.
Cons of a home equity loan
One of the biggest disadvantages of a home equity loan is the risk of losing your home if you are unable to pay back the money. And if the housing market takes a turn for the worse, you might end up owing even more than what your property is valued at.
Home equity lines of credit
A home equity loan is not the same thing as a home equity line of credit (HELOC). If a home equity loan isn’t right for you, you might want to consider a home equity line of credit. Although a home equity line of credit also involves borrowing against the equity in your home, you don’t receive your loan as a one-time lump sum. Instead, you receive a line of credit up to a certain amount, which allows you to make multiple withdrawals as needed.
If you’re receiving long-term payments from a structured settlement or annuity, you should consider your other options. Instead of potentially putting your home at risk with a home equity loan or home equity line of credit, why not sell your future payments for cash now?
Peachtree Financial Solutions can get you the money you need to take care of expenses, by offering you a lump sum payout for the sale of your future payments. Unlike a home equity loan or line of credit, there is never any money to pay back, your credit is never part of the process, and you don’t have to worry about potentially losing any assets. After all, it’s your money—you’re just accessing it sooner.
Are you interested in learning more about the process? We will be happy to give you more information and answer any questions you may have. Contact Peachtree Financial Solutions today!
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.