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Top Mistakes to Avoid when securing a Home Equity Line of Credit cont.
6. Assuming that your home equity loan is fully tax deductible. Most borrowers can use their interest paid on home equity loans as write-offs but in some instances, your home-equity loan is NOT tax deductible. The best thing to do is check with your CPA or accountant regarding this matter.7. Getting a home-equity line of credit when you plan to refinance your first mortgage in the near future. Many mortgage companies look at the combined loan amounts when refinancing the first mortgage. If you plan on refinancing your first, check with your mortgage company to find out if getting a second will cause your refinance to be turned down.
8. Getting a home-equity loan from your local bank without shopping around. Many consumers get their equity line from the bank with which they have their checking account. You should always look around to see who can offer you the best program available to you before making a commitment.
9. Not considering a cash-out refinance instead of a home equity line of credit. Depending on your current situation, sometimes it might be more beneficial to do a cash-out refinance instead of a home-equity line of credit. You should discuss the two options with your loan officer to see which will work better for you.
10. Getting a home-equity loan to payoff credit cards when your spending is out of control. It is wise to get a home-equity loan to payoff your current credit card debt, but you must stop spending and start paying your debt off. Be responsible and close out your credit card accounts.
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