Many consumers in the Altoona area are becoming more confident about the economy as memories of the recession fade. They are thinking about spending large amounts of money on things such as vacations and home improvement. Fortunately, there are a lot of borrowing options available such as credit cards and personal loans. However, many consumers will find that it is best to borrow larger amounts of with a home equity loan in Altoona, PA rather than with other loan products. There are a number of reasons why home equity is the best choice.
First of all, the interest rate on a home equity loan in Altoona, PA is lower than on any other loan product that’s used for consumer spending other than auto loans. The reason why interest rates are so low on home equity loans is easy to understand. This type of loan is secured by real estate as collateral. In order for a credit union to lose money on this type of loan, the proceeds from the sale of the collateral has to result in less than the balance of the home equity loan and the first mortgage. If the borrower has substantial equity after considering the mortgage and the home equity loan, the default risk is very minimal. That is why interest rates on home equity loans are so low.
The second reason for consumers to consider a home equity loan from institutions such as ARC Federal Credit Union is that the minimum monthly payment is very low. Home equity loans are often more than five years. The longer the duration of the home equity loan, the lower the minimum monthly payment. The low interest rate on this type of loan also helps to keep the minimum monthly payment low as well.
Finally, the interest on home equity loans may be deductible for some borrowers. In general, the interest on the first $100,000 of home equity debt is deductible. Consumers should contact their tax advisers for more advice on potential tax deductions for home equity interest.
Home equity loans are great due to low monthly payments, low interest rates, and potential tax deductions. Because of that, many choose this type of loan to fund college and home improvement. A local credit union can help consumers get this type of loan. Click here to know more.