HELOC

Nowadays, many consumers decide to refinance their mortgages or take out a second mortgage. This can happen for a variety of reasons. Three of the most common are to make capital improvements to a home, to take advantage of better interest rates, or to consolidate debt.

Bankers Trust wants to make consumers aware of a new option when it comes to the refinance of their mortgage, a home equity line of credit.

Unlike a traditional home mortgage loan, a home equity line of credit is for a pre-specified amount. Rather, under this plan, Bankers Trust will agree to loan you up to a certain amount, such as $100,000. You can take advantage of this agreement by withdrawing money in the amount that you need as you need it, without worrying that you have borrowed too much or too little.

Bankers Trust recommends this for consumers who have expenses that are variable. For example, if you are remodeling your home, it is hard to know exactly what the renovations will end up costing. Borrowing too much creates unneeded expenses, but borrowing too little can result in your renovations getting put on hold due to problems with cash flow. Having a line of credit that has the flexibility to accommodate a situation like this helps you avoid both problems.

Bankers Trust also wants consumers to know that if they opt to refinance with a home equity line of credit, the associated costs will be lower than with a traditional mortgage. However, there are certain aspects of a home equity line of credit, such as its exposure to interest fluctuations, which consumers should be sure they understand before they choose this option.