The Drawbacks of Financing Your Business With Home Equity

[mandy]

Though many business owners at some point tap into home equity as a financing source, you need to determine whether this strategy is right for you.

First, you should know the basic difference between the two primary kinds of home equity debt. A home equity loan is a one-time lump sum that is paid off over a particular amount of time with a fixed rate and number of payments. A home equity line of credit--also known as a HELOC--works more like a credit card because it has a revolving balance. Interest is due on the outstanding balance and that rate may vary over time.

As long as your home has appreciated in value, there will be a bank or mortgage broker who wants to loan you money in the form of either a home equity loan or line of credit right up to your credit limit. It's in their best interest because they make more money that way. Yet just because you qualify for a home equity line doesn't mean you need to use it, particularly as a bank for investment purposes...

full article: http://www.entrepreneur.com/money/person...84692.html