• Home Equity Loans

A home equity loan is a very popular means of borrowing money because of the low interest rates and the long repayment term. You're able to put cash in your pocket without having to worry about exceedingly high interest rates like those of a credit card. Also, because of the longer repayment term, your monthly installments are a lot lower and easier to manage with a home equity loan.

  • What is a Home Equity Loan?

In a sentence, a home equity loan is a loan that is secured by your home. As you pay off your home mortgage, your home equity increases. The lender company essentially owns the home initially because its their money that has been used to make the purchase. However with each payment that you make, you get more and more ownership of your home until your last payment and the title deed is handed over.

A home equity loan, Home Equity Line of Credit or Equity Loan as it is sometimes referred to, are types of fixed rate second mortgages that allows a home owner to borrow against and use the built-in equity or appreciation in the value of their home or other qualifying real property. The Loans are secured by the equity in your home and interest payments are usually tax deductible.

In their simplest forms, both are second mortgages. But with an Equity Loan is usually a lump sum amount of money where a Home Equity Line of Credit is a type of revolving credit that can be borrowed at any time up to a stated amount and where interest is charged as funds are borrowed or “drawn down.” Depending on where you live, a home equity loan can also be called a Home Equity Line of Credit

With a high percentage of ownership or home equity, you can qualify for a home equity loan. The home equity loan uses your home equity as security for that loan.

A home equity loan is a very popular means of borrowing money because of the low interest rates and the long repayment term. You’re able to put cash in your pocket without having to worry about exceedingly high interest rates like those of a credit card. Also, because of the longer repayment term, your monthly installments are a lot lower and easier to manage with a home equity loan.

What should I be aware of?
Because you’re using your home as security, it cannot be overstated that you need to be very sure of your financial ability to repay your home equity loan. If you take out the loan without properly confirming that you’re able to pay it back, you could be in a position where you will lose you home because of defaulting on your home equity loan payments.

Certain companies offer home equity loans of up to 125% of your homes value. Be very careful before applying for such a loan. Should you default, you could lose your home and still be liable for further debt thereafter. It’s a risky deal and should be carefully considered before signing on any dotted lines!

When carefully planned and considered, a home equity loan is by far one of the more popular and convenient ways to lend money.

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