PART A: Home Equity Loan Home equity credit loans and credit lines have become very popular...
PART A: Home Equity Loan
Home equity credit loans and credit lines have become very popular sources of consumer credit. Why do you think individuals are turning to these loans? What is the security for this type of loan? Are there advantages to the borrower beyond the tax deductibility of the annual interest paid? What are some of the disadvantages? Have you or anyone you know made a home equity loan? What was the outcome? What effect does a home equity loan have on your overall financial standing?
IMPORTANT: In relating any examples from real-life please disguise the names of individuals in order to protect their privacy.
PART B: Your Credit Score
Discuss the importance of having good credit and how you can maintain that good credit.
Homework Answers
Part A
Individuals find getting loans through home equity credit loans and credit lines simpler. The rates of interest charged are typically lesser than that of a credit card or a personal loan.
The security of these loans is your house. The available limit of the line of credit is decided based on your house price.
Advantages include a cheaper interest rate than credit card and personal loans. It can availed easily if the house has a substantial equity and the borrower has a good credit score.
Disadvantages include a variable rate of payment which varies monthly. An annual fee may be also charged to keep the line of credit running.
I do not know anyone who has availed this loan.
Part B\
Having a credit score ensures that the borrower has a good bargaining power while availing a loan. It also helps to get loans at a cheaper rate. A good credit score also helps to the get loans approved. It may sometimes also lead to upgrading the existing the credit limits.
To maintain a good credit score, one must pay their bills on time. Defaulting on a loan reduces the credit score drastically. Taking a secured loan also enhances the credit score. The number of credit lines, loan applications and credit cards should be managed. A high number of loans taken will reduce the credit score.
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PART A: Home Equity Loan
Home equity credit loans and credit lines have become very
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new home and you have six so fixed-rate loans are now very Suppose. Shampa just signed a purchase and sale agreement on a weeks to obtain a mortgage. Interest rates have been falling attractive. Shampa could lock in a fixed rate of 7% ( annual percentage rate) for 30 years. On the other hand, rates are falling, so Shampa is thinking about a 30-year variable-rate loan, which currently at 4.5% and which is tied to the six-month Treasury bill rate....
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Part 1: Mortgage A mortgage is a loan used to purchase a home. It is bedover a period of 1,20 or 30 years. The interest rate is determined by the term of the l e ngth of time to pay back the loan) and the credit rating of the person borrowing the money Once a person signs the documents to borrow money for a home the presented we amortization table or schedule for the mortgage...
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in the future) to build good credit, and link each example to one
of the steps to building good credit provided in the text. -->
(If you paid your bills on time, carried only a reasonable amount
of debt, didn’t max out your credit cards, had a history of
borrowing, hadn’t applied for a bunch of new loans, and borrowed
from a mix of lenders, you’d be in...
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