In brief : A home equity loan, also known as a second mortgage, allows homeowners to borrow money from their home's available equity.
Home equity loans are commonly used for debt consolidation, home improvements, educational expenses, unplanned emergencies, other gifts and purchases.
So you might ask : What are the benefits of having a home equity loan ?
Equity loans are a popular financing option for homeowners who need additional cash. These loans usually offer a lower interest rate than credit cards. In addition, the interest you pay may also be tax deductible. Do consult a tax advisor regarding tax deduction.
Fixed Equity Loan vs. Line of Credit
The two most popular types of home loans are a home equity line of credit (HELOC) and a fixed home equity loan.
A HELOC offers you a revolving credit line with a variable rate likened to a credit card. You draw only what you need, when you need it. They normally have a lower monthly payment because your payments are interest-only.
With a fixed home equity loan you receive the entire amount at once. It offers the stability of a fixed rate and fixed payments over the life of the loan.
Compare Options and Save
If you do decide that a home equity loan is right for you, remember to do your due homework. There are tons of options available so it's important that you compare lenders and rates in order to find the best home equity loan deal. Ask for free, non-obligatory quotes from various sources and do your math, and you will know how much you can save.
Whatever the case may be, you are ultimately responsible for servicing the loan. So make the right choice and do not be too hasty to jump into a situation you might not jump out of later.
Home equity loans are commonly used for debt consolidation, home improvements, educational expenses, unplanned emergencies, other gifts and purchases.
So you might ask : What are the benefits of having a home equity loan ?
Equity loans are a popular financing option for homeowners who need additional cash. These loans usually offer a lower interest rate than credit cards. In addition, the interest you pay may also be tax deductible. Do consult a tax advisor regarding tax deduction.
Fixed Equity Loan vs. Line of Credit
The two most popular types of home loans are a home equity line of credit (HELOC) and a fixed home equity loan.
A HELOC offers you a revolving credit line with a variable rate likened to a credit card. You draw only what you need, when you need it. They normally have a lower monthly payment because your payments are interest-only.
With a fixed home equity loan you receive the entire amount at once. It offers the stability of a fixed rate and fixed payments over the life of the loan.
Compare Options and Save
If you do decide that a home equity loan is right for you, remember to do your due homework. There are tons of options available so it's important that you compare lenders and rates in order to find the best home equity loan deal. Ask for free, non-obligatory quotes from various sources and do your math, and you will know how much you can save.
Whatever the case may be, you are ultimately responsible for servicing the loan. So make the right choice and do not be too hasty to jump into a situation you might not jump out of later.
