20 Reasons Why a Home Equity Loan Is More Powerful than a Personal Loan or Credit Line

Written by James Swift

What is a home equity loan and why would a person choose a secure equity loan over an unsecured line of credit or personal loan? This is a common question that I fielded over the years from consumers all over the country. There are many benefits a homeowner can receive from home equity loans that are not available with unsecured credit, so read on.

Homeowners are already well aware of the fact that their home is one of the most important investments and belongings in their life. But do you know how to put that home to work for you? A home equity loan is an excellent option when you reach a point that you are ready to have extra funds for various uses. Home equity loans are much more powerful than personal loans or credit lines, though many aren't fully aware of why that is.

Let's take a look at twenty reasons that it's a better option for you. In doing so, you'll likely see why this is the loan to pursue.

1. Better Interest Rates – Home equity loans have much better interest rates attached to them than personal loans or credit lines will due to the fact that they're backed by your home's equity instead of just based on credit. Homeowner have a true advantage by having access to low rate home equity credit lines.
2. Easier To Qualify For – You don't have to meet as many crazy requirements when qualifying for home equity loans. This makes equity loans much more accessible to homeowners than a personal loan or even a credit card could be. How Does a Home Equity Loan Work?
3. Tax Deductibility – The government offers numerous tax deductions on home equity loans that allow those using them to get big breaks in April, saving you money every year.
4. Better Overall Terms – The terms and conditions of home equity loans are much more favorable towards the borrower, making them easier to qualify for and to maintain.
5. Larger Loan Amount Potential – Since your loan is directly based on the worth of your home, you have the potential to receive a line of credit that is much higher than a loan based on your credit score.
6. Credit Score Matters Less – Your credit score has much less of an impact on your home equity loan. It's still very important, but other factors will be used as well to determine your eligibility. If you have some derogatory comments arising on your report, consider a bad credit home equity loan before going to the sidelines.
7. Access to More Cash In Hand – A home equity loan gives you cash in hand, not like a credit card or credit line. That cash can give you numerous additional advantages.
8. No Big Fees – The fees associated with credit cards and other loans aren't usually a factor, and you don't have to pay big annual fees to have a home equity loan.

9. Credit Card Consolidation – You can use the cash from your loan to pay off all your credit card accounts, eliminating those higher interest debts in favor of a single, lower bill.
10. Eliminate Medical Bills – Medical debt is a huge problem for many, accounting for the majority of bankruptcies in the country. You can pay off medical debt with your home equity loan. According to CNBC many bankruptcies today stem from outstanding medical bills.
11. Student Loan Debt Relief – The average student loan debt is $29,000, and that's a big burden for many. You can eliminate it with funds from a home equity loan. See the recent article posted by CNN about student debt and the epidemic.
12. Eliminate Higher Interest Rate Loans – Other loans can drag your financial health down due to high payments and interest. You can eliminate them entirely and reduce your monthly spending.
13. More Home Equity Loan Options –Equity loans and credit lines come in numerous forms, and with various structures and terms. You have more options when finding your loan of this type. In many cases the purpose of the loan will drive why type of loan or credit line best meets your needs. Ask questions, like: When will need the money? Do I know how much I need to borrow? Can I afford to take out an equity loan that increases my housing expenses monthly? Is it worth it?
14. Total Freedom with Funds – Some personal loans have restrictions on what you buy. Home equity loans give you money and let you do whatever you desire with it.
15. Cyclical Loan Opportunities – Many will use home loans to complete home improvements. In doing so, you increase your value of your home which in turn allows you to secure a refinance later. You can use a loan to increase value, then later pay off that loan and secure a better one.
16. More Lending Options – More lenders are willing to work with you on a home equity loan, making it easier to shop around and find the perfect loan for your needs. See HELOC loan rates when comparing home equity lenders.
17. Financial Cushion – Having cash on hand means having emergency funds and a financial cushion. Your peace of mind will be improved in a big way thanks to this.
18. More Confidence During Application – Most will have more confidence when seeking their loan, which means that they'll have more control over the loan they receive and a better overall experience getting a home equity loan than other types of loans available.
19. Improved Credit – By paying off existing debts and then staying current on repaying the home equity loan, you're able to easily pay your debts in full and greatly influence your credit rating in the process. In short, your home equity loan can improve your credit in a big way.
20. Easier to Understand – When you apply for and receive a home equity loan, the terms, conditions, and rates are given to you plainly. There are no hidden fees or 'traps', and you'll be able to understand everything about your loan immediately.