You also generally have the right to cancel the deal for any reason - and without penalty - within three days after signing the loan papers.įederal law gives you three days to reconsider a signed credit agreement and cancel the deal without penalty. If the loan isn’t what you expected or wanted, don’t sign. And, if you sell your home, most plans require you to pay off your credit line at the same time.īefore you sign, read the loan closing papers carefully. Loans with a large balloon payment - a lump sum usually due at the end of a loan - may lead you to borrow more money to pay off this debt, or they may put your home in jeopardy if you can’t qualify for refinancing. This may put your home at risk if your payment is late or you can't make your payment at all. Like home equity loans, HELOCs require you to use your home as collateral for the loan. Talk to an accountant or tax adviser for details. HELOCs also may give you certain tax advantages unavailable with some kinds of loans. Because a HELOC is a line of credit, you make payments only on the amount you actually borrow, not the full amount available. You can borrow as much as you need, any time you need it, by writing a check or using a credit card connected to the account. A home equity line of credit - also known as a HELOC - is a revolving line of credit, much like a credit card.
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