Using Your Home to Secure a Line of Credit

(September 15, 2011 )

This is a common question we get from our clients.  Many lenders and banks often offer to set you up with a line of credit, secured by your home.  However many people hesitate because they do not fully understand the benefits of doing so.  There could be several objections from homeowners:  they don't want to pay the one time legal fee to set it up; they may not need a large line of credit at this time; or they don't want any additional charges on their home.

I always recommend my past clients to get a secured line of credit.  It remains that fact that a line of credit secured by your home is one of the cheapest ways to borrow money.  It will have a lower interest rate than car loans and credit cards.  By consolidating all your debt into the line of credit, you may see significant savings in the interest you pay.

Though you may have to pay a one time legal fee to set up the facility, there is no monthly fees or ongoing cost if you do not use the line of credit.  You are only obligated to pay the interest on the portion of funds you borrow.  And if you ever need emergency funds, or you need to act fast to purchase a large ticket item, the secured line of credit will be there as a safety net.