This is a type of loan under which a property owner uses his residence as collateral security and can get prearranged amount against the property. The loan allows you to use into your home's built-up equity.
Home equity is the actual difference between the amount your home could be sold for and the amount that you already owe on the mortgage. Assume that the market value of your home is $200,000 and you owe $70,000 on your mortgage, then you have $130,000 equity available on your home. Remember that if you have more than one mortgage taken on your property, then all of them have to be considered for calculating the outstanding dues.
A home-equity loan is a good way to borrow money for two main reasons:
1. The interest rate is one of the lowest loan rates a borrower can get.
2. The interest you pay on the loan is tax-deductible. Thus it is sometimes recommended by many to replace other consumer loans whose interest is not tax-deductible, such as auto loans, credit card debt, and medical debt with the Home Equity Loan.
Caution: If you don't repay the debt, you can risk losing the home and be forced to move out. Do act with care and make sure you are able to fulfil the repayment terms.
There Are Two Types of Home Equity Loans
1.The standard home equity loan,
2.The home equity line of credit (HELOC's)
In a standard home equity loan, a pre specified amount of money is loaned in a lump sum for a specified period of time and the same amount of interest is paid every month. It is also called a term loan, a closed-end loan or a second mortgage installment loan.
HELOC works similar to a credit card because it has a revolving balance. A HELOC allows you to borrow up to a certain fixed amount for a specified period of the loan which is set by the lender. During that time period, you can withdraw as much money as you need. As you clear the principal, you can use the credit again, like a credit card.
These loans are repaid in a shorter period of time than the first mortgages. They often have a repayment period of 5 to15 years.
The loan could be either a fixed interest rate or a variable interest rate.
Homeowners often use a home-equity loan for home improvements or debt consolidation or to pay for a new car or to finance their child's college education.
NamSing Then is a regular article contributor on many topics. Be sure to visit his websites Equity Loan Resources, Home Equity Loan and Online Home Equity Loan
- Related Videos
- Related Articles
- Ask / Related Q&A
- Encash your Home Equity With Secured Loans
- Secured Personal Loans- Equity Decides the Loan Amount
- Equity Through Secured Loans: Alleviating the Financial Pressures of Divorce
- Improving your Home With a Secured Loan
- Non Homeowner Loans: Get Loan Without Submitting your Home Equity
- Refurnish Your Home With a Personal Loan
- Mortgage Refinancing, Countrywide Home Loan & Equity Loan Rate
- Personal Loans: Compare Loans and Take your Pick
Payday Cash Advance Loan For College Students - Is it a Good Idea?
By: Matt Couch | 23/11/2009Sometimes student loans just aren't enough to live comfortably and many college students are turning to a payday cash advance loan to get fast cash. As a recent college graduate, I am fully aware of how expensive college can be and for many college students this is the first time in their lives where they have to fully support themselves. With books, rent, food, and extra curricular expenses, college students have to tightly manage their budget to get by.
How to Get Out of Debt With a Payday Cash Advance Loan - A Quick Fix For Desperate Financial Times
By: Matt Couch | 23/11/2009A payday cash advance loan will provide a quick fix for consumers experiencing desperate financial times. These fast cash loans are not a permanent solution to get out of debt but they are extremely helpful in providing Americans fast cash when they desperately need it.
Debt Settlement Companies - Important Advice For Finding Legitimate Debt Settlement Programs
By: Matt Couch | 23/11/2009Debt Settlement companies have a very high earning rate at the moment. The requirement of these companies is increasing with the passage of each day. This is because these companies are required to combat the recession problems. Improving the financial conditions and monetary circumstances requires debt settlement companies to play a major role.
Debt Relief - Legal Ways to Avoid Paying Back Your Credit Card Debt
By: Matt Couch | 23/11/2009It is not hard to understand what debt relief companies are created for. They act as temporary solutions designed to eliminate credit card debts. At present the pending amounts of these unsecured liabilities are rising on daily basis. Debt relief is the perfect solution in this case.
Debt Settlements - How Eliminate a Percentage of Your Debt by Negotiating a Settlement Deal
By: Matt Couch | 23/11/2009Debt settlements are a solution through which customers negotiate with their borrowers to lower the amount of payment so that they can easily pay. Negotiating debt settlements starts right from your credit accounts with your current credit providers, which are financial industries. We are not talking about chucking off a portion of your liability through negotiation.
Legally Never Pay Back Unsecured Debt - Secrets to Eliminate Your Unsecured Debt
By: Matt Couch | 23/11/2009Most of the people who are stuck in high credit card bills are mostly the ones who are poor managers of their expenses. They make every purchase on this plastic money. Even the society has left no other alternatives and demand MasterCard for all sorts of payments.
Debt Settlement - How a Debt Settlement Works and Are They Worth the Money?
By: Matt Couch | 23/11/2009If you are behind your arrears payment schedule and thinking of bankruptcy as the only way of getting yourself back on track, think again. Bankruptcy is generally considered the nuclear option because it's a mark that stays on your credit report for 7-10 years, depending on which one you declare.
Stop Paying Your Credit Card Debt - Why to Stop Paying Credit Card Debt and Get a Settlement Deal
By: Matt Couch | 23/11/2009People are so busy in their daily routine that they do not take notice of how these credit card bills are so high but they are still managing difficultly to pay.
Top 7 Health Benefits of Aloe Vera Supplements
By: Namsing Then | 02/10/2008 | Alternative MedicineMany people knew about the healing powers of aloe vera. Most the usage are confined to superficial treatment like small wounds and burns, using processed aloe vera cream. However, the usage of aloe vera is far more than that. Modern technologies are able to extract aloe vera into pure capsules or supplements.
Guitar Sucks You In. So Tune up Your Life
By: Namsing Then | 05/12/2006 | MusicYou rarely, if ever, come across a guy or a girl who hasn't heard of guitar, let alone see it or play it.
Home Equity loan, Cashing in On Your Equity
By: Namsing Then | 04/12/2006 | FinanceThis is a type of loan under which a property owner uses his residence as collateral security and can get prearranged amount against the property.
Herbal Pill, Act with Caution
By: Namsing Then | 04/12/2006 | Non-FictionNormally the spam mails one receives regularly in their mail boxes speak of herbal pills used for enlargement of the penis or 'male enhancement' or about the herbal breast enlargement pills for women.
How To Plan Your Own Golf Vacation
By: Namsing Then | 04/12/2006 | GolfPlaying golf is one of the passionate hobbies of the upper echelons of the society.
Forex Trading Do You Have It In You
By: Namsing Then | 03/12/2006 | FinanceForex is short for Foreign Exchange, where money from one country is exchanged for that of another or the simultaneous buying of one currency and selling of another.
Care For Your Fish Tank
By: Namsing Then | 03/12/2006 | PetsFish tank is an ideal domestic decorative item that goes perfectly well with every sort of decor. Ideally, you will have it a prominent corner of your living room or if you are speaking of office, you would like to keep it in the lobby. Chinese Feng Shui advocates fish tanks in every home for prosperity.