Also called a second mortgage a home equity loan is a good way to tap into the value you have built up in your manufactured home. These types of loans are normally capped at $100,000 but the main limiting factor is the amount of equity you have in your home. The interest is also tax deductible just like that of a first mortgage.Home equity loans come in two basic types; the fixed rate and the line of credit. The terms for both similar and are normally required to be paid off in 5 to 20 years. The loan will also need to be paid off if and when you sell your home.The main difference between these two types of loans is how they are paid out to the borrower.With a fixed rate home equity loan the borrower get a lump sum payment for the face value of the loan. The interest rate is fixed with set monthly payments that remain the same for the life of the loan.A line of credit usually has a variable interest rate and is set up to function in much the same way a pre-paid credit card works. In fact many lines of credit come with a credit card that allows the borrower to tap into the account whenever needed. Once the borrower starts using the money monthly payments will start and are based on the current interest rate and how much money was borrowed that month. Once the life term of the loan is up any outstanding balance must be paid in full.One advantage of getting a manufactured home equity loan is the ability to get a large amount of money in a short amount of time. This money can be used for a multitude of things including home improvement projects, paying off another loan, college tuition, and other expenses that come unexpectedly.One of the most common uses for a home equity loan is debt consolidation. By transferring all your debt to one loan you will have one monthly payment at a much lower interest rate then found on those nasty credit cards.These types of loans come with one danger; your home is the collateral and if for any reason you fall behind on or fail to make payments the lender can start foreclosure proceedings. This is why anyone considering using the equity in their home in this manner needs to thoroughly research and understand the terms of the offer the lender is making.Getting an equity loan on your manufactured home can be a good financial tool if it is used correctly. The advantages and disadvantages must be weighed carefully before making a final decision to determine if such a loan is right for you.
