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Putting Your Maryland Home Equity to Work

By Karen Lawson
Local Lender Columnist
Oct 17, 2007
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Home equity financing can provide cash for purposes from a lavish vacation to starting a business. In today's changing real estate markets, it's a good idea to review your overall financial situation before taking out a home equity loan.

Keeping a cushion of home equity is advisable as it can provide protection from volatile real estate markets. Although market conditions in Maryland have remained relatively stable, maintaining a "cushion" of home equity can help protect against changes in local real estate markets.

Home Equity Can Provides Funds at Lower Cost

A key to getting the most from your home equity loan is to compare the annual percentage rate (APR) of accounts you're planning to pay off with your home equity loan. In the case of consumer credit cards, the APR shows the actual cost of your accounts including late fees and other charges in addition to interest rates. For example, you may be paying close to 25% APR on your credit cards, but could pay them off using a home equity loan with a much lower rate. Mortgage loans disclosures must also provide APRs, so it's important to compare the APR of your home equity loan options in addition to comparing the APRs of the debts you want to pay off.

Bahamas or Business Loan?

You've probably seen ads featuring carefree families cavorting on tropical beaches, and soon learn that the ad is for home equity financing. If you have a large amount of home equity, vacations may be an option, but it's a good idea to carefully review your overall financial situation, and your goals. A financial advisor can help you find the best ways to utilize home equity according to your situation. Mortgage lenders can help you select home equity financing that best meets your needs.

Source
Househunt.com

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds a Master's degree in English from the University of Nevada, Reno.