| In its simplest definition, home equity
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| | credit card.
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| loan means using your house equity as
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| | The interest rate for a home equity line
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| collateral in order to borrow money.
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| | of credit is variable and will rise and
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| Collateral means your house will act as a
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| | fall during the loan period. Payment per
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| guarantee. In the case if you cannot pay
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| | month depends on the total sum loaned,
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| the loan or defaulted too long on
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| | the interest rate and whether your credit
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| payment, the lender has the right to sell
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| | is in the payment or draw period.
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| the house to get back the loan.
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| | During equity draw period, you can decide
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| The word equity simply means how much the
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| | whether to pay the principal loan amount
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| house is worth minus the mortgage you
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| | or the minimum payments to cover the
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| currently owe.
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| | interest.
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| There are two types of equity loan
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| | For equity line of credit, the loan
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| 1) Home Equity Loan
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| | period is usually shorter than home
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| A home equity loan is a one off lump sum
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| | equity loan. Usually, it is between 5 to
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| of money when you take up a loan.
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| | 15 years. During this loan period, you
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| Usually, the loan period is between 5 to
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| | will not be able to increase the loan or
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| 30 years and the interest rates are
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| | repay the balance left in the loan. Do
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| fixed. The payment amount per month is
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| | note, there is usually a minimum amount
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| fixed as well.
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| | whether you decide to withdraw some money
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| 2) Home Equity Line Of Credit
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| | from the loan.
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| A home equity line of credit allows you
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| | As you see, an equity loan line of credit
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| to borrow a fixed amount of money for the
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| | has greater flexibility compared to home
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| life of the loan. You do not need to take
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| | equity loan. However in both cases, if
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| a lump sum loan at once since you can
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| | you decide to sell the house before the
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| withdraw any amount of the loan when you
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| | loan is fully paid, you are required to
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| need it. In a sense, it works like a
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| | pay the balance immediately.
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