Home eq. loans, good or bad??

[minnieandmickeymouse]

We just went to our local bank to get a loan out to buy land, so we can build a home on it next year. The bank says this is the better one to get the home eq. loan because there a lower rate, and no closing costs. So is this really the better way to go?

 

[Toby'sFriend]

I think that probably depends on how soon you will be building on the new land. I assume you will sell the house with the home equity loan attached then and pay that loan off?

Most Home Equity loans are adjustable rate loans. They usually start with a very low introductory rate and then adjust upwards. With interest rates rising as there are, that "low rate" probably will not stay low for more than a year or so depending on the particular terms.

 

[minnieandmickeymouse]

The intrest rate is 7% and good for 5 years. It will be paid off in about a year.