Home Equity Loan Lines of Credit vs. Credit Cards - Which is Better? The Mortgage Store Online Report

Toronto, Ontario (PRWEB) June 12, 2006 -- The Mortgage Store Online today released an exclusive report on the rate and payment benefits of home equity loan lines of credit, showing them to be the much better option for U.S. and Canadian potential borrowers looking for low interest credit options, compared to the use of credit cards.



Currently, the interest rate for home equity lines of credit is vastly lower than the interest rates that leading credit card companies in North America offer. According to BankRate.com, lowest US rates for home equity loan lines of credit presently average out at 6.31% and the Canadian rates come as low as 6%.

These home equity rates sit much lower than credit card rates from the most popular credit card companies - MasterCard, and American Express.

* Home equity loan line of credit rates are 11.98% and 13.49% LOWER than a MasterCard credit card for U.S. and Canada, respectively. (The current interest rate for MasterCard is 18.29% for U.S. and 19.49% for Canada.)

* Home equity loan line of credit rates are 11.93% and 12.99% LOWER than an American Express credit card for U.S. and Canada, respectively. (The current rate for an American Express card is 18.24% for U.S. and 18.99% for Canada.)

Although the results of this report may surprise first time borrowers, Joe Janovich, President of The Mortgage Store Online says that this is not a new trend. "Home equity loan line of credit rates are almost always significantly lower than those of the credit card. It has been this way for many years. The real surprise that comes with this report is the number of people who aren't taking advantage of this line of credit."

Saving Tens of Thousands of Dollars

US borrowers who choose a home equity loan line of credit over a MasterCard can expect to save $26,316 for every $10,000 increment, over 25 years using the current rate of 6.31%, and Canadian borrowers can expect to save $28,116 on the same amount with Canada's rate of 6%. "Although it may seem strange to borrowers that they could save around 'twenty' thousand dollars on a mere 'ten' thousand dollar loan, the effects of interest compounding over 25 years creates a debt that greatly exceeds the original borrowed amount, especially with credit card rates that are as high as 18%," states Janovich.

The Monthly Savings

With a home equity line of credit, US borrowers would pay $66.34 a month, and Canadians $63.98 a month, on each $10,000 amount they use from the credit line. However, with most credit cards, the minimum payment alone would be $300/month on the same borrowed amount, as most credit card companies require card users to make minimum monthly payments that equal 3% of their current card debt.

Overcoming Misconceptions About Home Equity Lines of Credit

Janovich also understands that both Americans and Canadians have many misconceptions about home equity lines of credit, that lead them to choose the credit card instead. "These misconceptions make people lose out on tremendous savings. It's important that brokers and banks debunk the myths that place credit cards on a pedestal. By properly understanding and utilizing home equity lines of credit, North Americans can save money and keep their debt to a minimum."

In order to clarify and discredit the rumors about home equity loan lines of credit, The Mortgage Store Online has provided the following articles to educate both US and Canadian borrowers:

* Monthly payments on home equity loan lines of credit are lower than credit card minimum payments

* Larger borrowed amounts come from home equity lines of credit

--    Proof of income not necessary for home equity loan lines of credit

--    Broker fees do not make home equity loan lines of credit more expensive than credit cards

--    Home equity line of credit, defined

About the Mortgage Store

The Mortgage Store Online provides home and commercial mortgage loans in most Canadian provinces (excluding Quebec and the Territories), along with mortgage news and advice for all of North America. Founded by veteran mortgage broker Joe Janovich, The Mortgage Store Online couples 'real world' experience, industry relationships, customer service and secure technology with the convenience of the Web. Learn more about The Mortgage Store Online's home equity loan services and mortgage line of credit options by calling (866) 880-2577 or visiting www.themortgagestoreonline.com

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