| A refinance with cash back from your home's equity is | | | | and longer loan repayment periods. Therefore, equity |
| not a phrase you hear much of nowadays due to not | | | | loans which have a fixed rate have some benefits |
| a lot of folks or locations gaining in appreciation. It is | | | | right from the get-go. |
| vital to understand exactly what the term "home | | | | It is important to understand that it is a second |
| equity" actually means. | | | | mortgage or lien on your property. Similar to your first |
| As an example, you own a house and it is worth | | | | mortgage loan, when you accept an equity loan you |
| $150,000 from a professional appraiser report or the | | | | will normally have terms that give you a fixed interest |
| local realtor ran some comparable property sales for | | | | rate, and a repayment period ranging from 10 to 20 |
| you. The debt owed on the property is just $50,000. | | | | years. An equity line of credit is different in that the |
| As a result, the cash you have available in your home | | | | interest rate may vary over time and depending when |
| is $100,000; the difference between the principal | | | | you choose to use the proceeds from the credit line, |
| mortgage balance owed and the current value of the | | | | the terms will begin. The choice is a difficult one when |
| property. So you know you have some value in your | | | | choosing a "Line of Credit" or "Home Equity Loan" due |
| property and now want a second loan on your home. | | | | to your individual needs at that time. |
| What is better, a Home Equity Line of Credit (LOC) or | | | | In general, people pick a fixed rate home equity loan |
| a Home Equity Loan? | | | | for costs and fees that are not recurring like a home |
| The attractive part about fixed rate equity loans | | | | improvement job on the home and a line of credit is |
| compared to a line of credit is that it can be used for | | | | best used for recurring expenses. |
| tax write-offs, features below market interest rates | | | | |