Need help understanding home equity credit line
I want to take out a home equity line of credit. I applied at ditech.com and
had a terrible experience with the worst customer service I've ever
encountered, so I canceled the application. I need help understanding how
the interest works. Nothing ditech told me made sense. Their version is that
the line of credit would be $15,000. As soon as I use any of it I would
start paying an amount of interest per month that is 10 percent of $15,000
regardless of how much of the line of credit I used. I could use $50 but
still have to start paying all that interest. And, I would have to keep
paying it for ten years, even if I paid off the amount of the line of credit
I used. Does that sound right? I'd end up paying interest on money I never
used. I can't imagine anyone agreeing to that kind of a deal. Can anyone
explain this? Or, recommend printed or on-line resources I can use to
educate myself?
-I'll make it simple for you: Home equity means just that . . . it means you
are allowing a bank to own part of your house. In return, they give you
cash at a (relatively) low interest rate. All you have to know is that it's
a really really BAD idea, and don't do it. That was easy, eh?
-Let's see: you're considering paying 10% *PER MONTH*? And on the
full amount of the credit line? Those underworld guys who break
kneecaps for a living called "loan sharks" have MUCH better interest
rates, and NO, I'm not recommending them either