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Thursday, July 2, 2009

Choosing the Right Loan That Fits Your Needs

First I want to talk about why you should use a line of credit and why you should not. The main reason to use a line of credit would be because you are unsure of the amount of money you need such as building a barn, adding to your house, buying a home for your kids. If you are unsure of the amount of money you need a line of credit may make sense. Also if you truly need the lowest payment possible. Almost all lines of credit are interest only which make for a lower monthly payment. If you do not have one of these reasons in using a line of credit it is probably going to make sense to utilize a fixed loan and below are the reasons why.

On a fixed loan your payment will be fixed for the life of the loan. Where as a HELOC or LOC will be variable over the course of the loan. With mortgage pricing being the lowest it has been in years there is only one way for it to go and that is up. Remember although you may want the lowest payment now what will happen if that payment goes way up over the course of the next 4 or 5 years. It could be a huge hit to your budget.

Always make a loan officer do the leg work and be sure that the fixed loan is the best option for you or the line of credit is the best option. Which will save you the most money and meet your goals according to what you want to accomplish.

All in all it should be easy to use math and logic to see which is the better option for you, but be open. An experienced loan officer will give you the best options possible and will always show you why it is just that.


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