Many people have been afraid of how to get their hands on money lately, especially when it comes to getting financing for a home loan and even for refinancing. Many have considered taking out a line of credit from home equity so they have a cash cow in case anything happens to the economy.
Thursday, the warning signs came back after a Treasury bond ended up going below the 2-year rate for the third time in less than two weeks. When this happens, it’s a very early sign of an economic recession.
But the question truly is this – Do you really need to take out a home equity loan? Won’t it affect your credit history and score?
Ric Edelman is the founder of and the executive chairman of Edelman Financial Engines points out that taking out a HELOC doesn’t actually hurt your score. It may affect your chances of getting other debts however because even though it won’t hurt your credit score, there is only so much money you can get as a borrow. So if you’ve used up a lot of your credit available, adding more can be a risky venture. On top of that, most HELOCs have what are called variable interest rates, meaning that they can rise or fall throughout the course of the loan.
Edelman actually thinks you should be refinancing with the insanely low interest rates. You can refinance your home with a lower rate than you had before and get some cash out of it yourself in the process.