What Is Home Equity Loan

Must Read

College Loan Forgiveness

College loan forgiveness is a process of wiping away a person's college loan debt in one fell swoop. It...

What Do Retailers Love More Than Black Friday? Cyber Monday

Cyber Monday-a clever ploy by online retailers and marketers to increase sales or an actual high-volume sales phenomenon? Honestly,...

Take Debt Consolidation Advice – Free Yourself From Debt Problems

Debts create a lot of problems for every borrower. The problems can range from mental disturbance to bad credit...

In its simplest definition, home equity loan means using your house equity as collateral in order to borrow money. Collateral means your house will act as a guarantee. In the case if you cannot pay the loan or defaulted too long on payment, the lender has the right to sell the house to get back the loan.The word equity simply means how much the house is worth minus the mortgage you currently owe.There are two types of equity loan1) Home Equity LoanA home equity loan is a one off lump sum of money when you take up a loan. Usually, the loan period is between 5 to 30 years and the interest rates are fixed. The payment amount per month is fixed as well.2) Home Equity Line Of CreditA home equity line of credit allows you to borrow a fixed amount of money for the life of the loan. You do not need to take a lump sum loan at once since you can withdraw any amount of the loan when you need it. In a sense, it works like a credit card.The interest rate for a home equity line of credit is variable and will rise and fall during the loan period. Payment per month depends on the total sum loaned, the interest rate and whether your credit is in the payment or draw period.
During equity draw period, you can decide whether to pay the principal loan amount or the minimum payments to cover the interest.For equity line of credit, the loan period is usually shorter than home equity loan. Usually, it is between 5 to 15 years. During this loan period, you will not be able to increase the loan or repay the balance left in the loan. Do note, there is usually a minimum amount whether you decide to withdraw some money from the loan.As you see, an equity loan line of credit has greater flexibility compared to home equity loan. However in both cases, if you decide to sell the house before the loan is fully paid, you are required to pay the balance immediately.


Please enter your comment!
Please enter your name here

Latest News

Underlight As Accent, For Power and The Main Light for Photography

Underlighting, in which fill or accent light comes from under the topic, is not widely used technique in the traditional Portraits,...

How To Fix Overexposure As A Creative Tool, The Complete Guide

As an creative tool, overexposure is sort of underrated. What I’m close to propose could be a deliberate and well thought out technique for...

7D Mark II is Canon’s best DSLR cameras without full-frame sensor.

The expected long-awaited Canon EOS 7D Mark II are shipping in November for $ 1,799 without a lens. With a higher price tag, you...

Low key photography and How to isolate your subject.

Low key photography doesn’t depend on underexposure to make its point; the key to low key is that the majority of tones, even correctly...

High Key Lighting Techniques for Professional Photographers

I’ve written many times about high key lighting techniques and how to achieve them. The term “high key” is a bit misleading. As I’ve...

More Articles Like This