Cost Of Equity Capital Equation

Posted on December 05, 2011 by Admin
Cost Of Equity Capital Equation

Cost Of Equity Capital Equation

A home equity loan can cost less then a second mortgage even when the home equity loan has a higher interest rate because unlike a home equity loan, the mortgage will likely have closing costs associated with it. It only takes a few simple calculations to find the break even point and determine the actual savings.

The interest rates on mortgages and home equity loans are usually pretty close to each other and have been historically low for some time now. The purpose of this article is to explain how a home equity loan that has a higher rate can still be less costly then a mortgage which has closing costs, and how to factor the closing cost’s into the equation in order to properly compare apples to apples when shopping for a home loan.