Home Equity Mortgage Loans

A Home Equity Loan is a Second Mortgage that homeowners can get by leveraging the equity they have built in their homes. A Home Equity Loan is a lump sum of cash that a borrower receives when the loan closes. The loan is repaid over a set period of time, with interest. Many Home Equity Loans come as Fixed Rate Loans with terms varying from five to fifteen years.

A Home Equity Loan is useful because it provides homeowners with easy access to cash. The interest rates on Home Equity Loans are higher than a first mortgage, but much lower than a credit card, so the Home Equity Loan may be a useful solution to pay off credit card debt while saving money on interest. The interest you will pay on a Home Equity Loan is tax deductible, which is also a useful financial benefit for borrowers. The Home Equity Loan is a highly sensible solution for unforeseen, yet highly expensive costs. Home improvements such as a new roof, or emergency medical bills are both good reasons to get a Home Equity Loan if you have the means to pay it back. However, if you have spending or credit issues and need money to pay off your debt, a Home Equity Loan is not a good solution. Unless you change your habits of spending, a Home Equity Loan can help you sink further into debt.

How can I get a home equity loan?

If a Home Equity Loan sounds like it might be the choice for you, click here to find out more.

How is a Home Equity Loan different from a Home Equity Line of Credit?

Both the Home Equity Loan and the Home Equity Line of Credit use the equity in your home as leverage for a loan. The main difference lies in how you receive payment for the loan. In contrast to the lump sum you receive up front for a Home Equity Loan, a Home Equity Line of Credit is an amount of money set aside that you can draw on when necessary. It functions more like a credit card than a Home Equity Loan.

Another little tidbit… The Home Equity Loan became very popular in 1996 because they provided ways for homeowners to evade new tax laws.

 

 

This site is not a broker and does not collect or solicit mortgage applications. Content is for informational or comparison purposes only. Services are not available in New York. Products and services may not be available in all other states.

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