| Although home equity loans are a good technique to | | | | use the collateral already invested in your home to |
| free up extra cash which is tied up in your home, | | | | secure the loan, helping you to get a better rate out of |
| borrowers must be fully aware that they are using | | | | the deal and make lower payments than you would to |
| their home as collateral. In the event that their loan | | | | a credit card or even on a personal loan. Home equity |
| obligations aren't met, they could lose their home. | | | | loans are appealing to borrowers because they usually |
| Traditionally, home equity loans were by and large | | | | have a lower interest rate and are easier to qualify for |
| used for home upgrades that would increase the value | | | | even if you have bad credit. As a bonus, payments on |
| of your home. However, these loans have become a | | | | a home equity loan may be tax deductible. |
| feasible alternative for large, non-home improvement | | | | So how much can you get? Equity loans allow |
| related purchases or even for consolidating | | | | homeowners to borrow money against their home's |
| outstanding debts into one monthly payment at an | | | | calculated value. Equity is simply estimated by |
| affordable interest rate. Home equity loans are, | | | | subtracting the outstanding balance owed on the home |
| essentially, fixed rate home loans that allow you to | | | | from the current market value. It merely refers to the |
| draw on the cash you've already invested in your | | | | cash value that has grown in your home while you |
| home to finance larger debts at less of an interest rate | | | | have been making regular payments over time. |
| than most revolving credit choices. Home equity loans, | | | | While most lenders like home equity lending and may |
| occasionally referred to as a second mortgage or | | | | be more liberal because they view home equity loans |
| borrowing against your home, can open up a lot of | | | | as relatively safe, it's still a loan. Lenders review many |
| avenues as a funding source for a current | | | | factors such as your credit history, ability to repay the |
| homeowner.. | | | | loan, and your homes equity (noted above) when |
| These loans, secured by real estate, are usually | | | | deciding how much money to lend. In the end, home |
| regarded as safer by lenders. Because of this your | | | | equity loans are a great deal if you are certain of your |
| interest rates also tend to be lower than credit card | | | | ability to pay them off. Because they normally have a |
| rates or consumer loans. In addition, regardless of the | | | | lower interest rate, are less difficult to qualify for (even |
| rate, the interest on debt secured by the mortgage or | | | | with poor credit) and the interest may be tax |
| lien on your personal residence is generally | | | | deductible, home equity loans are a great alternative |
| tax-deductible. Please consult your accountant for | | | | for homeowners. Like anything else however, buyer |
| more detailed information. | | | | beware. Lesser known lenders will often target people |
| Home equity loans can be used to consolidate | | | | in vulnerable situations with troubled credit by offering |
| consumer debt or covering a large expense such as a | | | | what appears to be an easy answer. Hidden fees and |
| wedding, college expenses, or home repairs to your | | | | difficult to understand rate calculations can make a |
| existing home. Home equity loans are great in that they | | | | bad situation get even worse. |