Simplicity is bliss in the world of finances, and without incredible organization skills, it can be burdensome to keep track of your assets. That’s why it makes sense to consolidate whenever possible, which is one of the many benefits a home equity line of credit has to offer.

There are a multitude of things to keep in mind when considering a home equity loan or line of credit. There’s obvious concern of putting one’s house on the line, so often these loans are saved for high priority situations that require a substantial amount of money, like doing home repairs or renovations or paying for a college tuition.

There’s also the considerations of which type of home equity loan to get — a lump sum or a revolving line of credit — and where to get it from. recommends applying for a home equity loan with a credit union or bank first, as they are likely to cost significantly less that those you would get from a finance company.

Why A Home Equity Line Of Credit Might Be Your Best Option

Home equity loans and credit lines are more specifically the practice of using the difference between a home’s sell value and what’s owned on its mortgage — known as equity — as a bartering token, per the Federal Trade Commission When one “taps” into home equity, it means they are putting their home on the line as collateral for a large sum loan. The total amount of money you can access is traditionally limited to 85 percent of your home’s equity, and that percentage is affected by your income, market value and credit history.

Whether to get a loan or a line of credit might depend on what exactly you’re looking for. The APR for a home equity loan, for example, takes into consideration your credit score and financing charges, whereas the advertised APR for home equity lines of credit is based purely on the interest. Furthermore, payment amounts can change for a variety of reasons during your term, even if your credit line doesn’t have a variable interest rate.

Loans leave a lot of room for negotiation and tend to be fairly flexible. Lines of credit are sometimes part of special deals with the bank and are less negotiable. Loans can also be more easily negotiated across lenders, who will sometimes make efforts to meet or beat other lenders” rates and practices.

Save on Your Taxes

Because of the nature of a Home Equity Loans & Line Of Credit, the interest you pay on it may be tax deductible, versus auto loan and credit card interest payments, which are not.

Consolidate Your Debt

Home equity loans and lines of credit tend to be large sums, making it easy to use them to pay off other debts as a way of consolidation. This is likely to lead to lower monthly payments and can help reduce the build up of interest.