Question Details	Asked By	Asked On
Line of Credit Loans	sallie00	01/31/06
I am interested in borrowing 35,000 to 40,000. I plan to pay it back in a year after selling a house. To get the best deal on a line of credit, what things and features should I be aware of? I heard of interest only loans, is that a plus? Any advice will be appreciated. Thanks in advance.
Answered By		Answered On
Jim.McGinness		01/31/06
The loan business has gotten somewhat crazy. What used to be general rules are not necessarily true today. That being said ... An unsecured loan will have a higher interest rate than a secured loan. A second (junior) mortgage will have a higher interest rate than a first (senior) mortgage. If you have a house to use as security, your lowest cost loan is possibly a refinance of your existing mortgage, with a cashout of your current equity. This increases your overall mortgage obligation, but -- assuming no disaster strikes -- should ultimately cost you less than securing a temporary line of credit. Interest-only loans are used in situations where, for example, a new home buyer cannot qualify for the payment on a conventional loan. Careful shopping will let you find the lowest rates, but you'll need to be an even more careful shopper to figure out which set of terms is actually the one that best fits your situation. With the new laws in place, personal bankruptcy looks to be an even more undesirable place to have to visit if things do not go the way you expect.

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