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Article: Home equity loan has its costly side
- Article from:
- Chicago Sun-Times
- Article date:
- September 4, 1987
- Author:
CopyrightCopyright (null) Chicago Sun-Times. (Hide copyright information)
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At first glance, home equity loans look like the pot of gold at
the end of the rainbow.
Most types of home equity loans generally feature low interest
rates, easy qualifying requirements, flexible repayment terms and
even give the borrower a federal income tax deduction for interest
payments.
They also can be costly. Most home equity loans have interest
rates fixed at 0.5 percentage point to 3 percentage points above the
prime lending rate. When the prime rate changes so does the interest
rate on most of these loans.
Today, the prime rate is a moderate 8.25 percent. However, if
the prime lending rate were to skyrocket as it did in 1980 to 21.5
percent from 11 percent, interest ...