The answer to this question is seldom black and white. But there are some scenarios where the choice is obvious.
Example 1-Fixed Expense
Your daughter has finally decided to get married and you need $7,000 to pay
for the wedding next month. You also don't want the roof of your house to leak
during the reception. And you need $3,000 to fix your roof, which will take
a week. You know exactly how much you need and both amounts are due in full
fairly quickly. If you don't have plans to borrow again, a straight Home Equity
Loan for $10,000 is more suited to your purpose.
Example 2-Ongoing Expenses
Your son has decided to pursue a higher education; you'll need to pay tuition
at the beginning of each semester for the next four years (hopefully). At the
same time you've decided to remodel his room into the den you have always wanted
(a project that may never end). A Line of Credit is the better choice. It gives
you the flexibility to borrow only the amount you need, when you need it. And
if you borrow relatively small amounts and pay back the principal in a reasonable
amount of time, a line of credit can cost less than a fixed rate home equity
loan.
Home Equity Loans can be used to achieve almost any financial goal. Knowing
which one you need helps you make the right decision. Talking to a credit union
representative can make it a reality.
Contact USPS FCU for more information about Home
Equity Loans.