| Your Equity Is Your Security | | | | Interest from a home equity loan is tax deductible in |
| Your home's equity is the basis for your home equity. | | | | many cases, unlike other forms of credit. There are |
| You can choose to access it with a variety of loan | | | | caps on your income and the property value. For |
| terms. Refinancing with a cash out will lock in long term | | | | example, you can't write off interest for a loan that |
| rates. A second mortgage pulls out part or all of your | | | | exceeds your property's value. There are also |
| equity while keeping your original mortgage intact. This | | | | limitations on what the loan can be used for in some |
| is nice if you have a low interest home loan. Finally, you | | | | cases. Before using this deduction, be sure to read the |
| can create a line of credit based on your equity. It acts | | | | IRS regulations. |
| much like a low interest credit card. | | | | Home Equity Loan Rates Vary Between Lenders |
| While loan terms affect your rates, so will your | | | | As with every other type of credit, rates will vary |
| property's value. Using all of your equity will bump up | | | | between lenders. Each lender will rate your application |
| your rates. Don't forget to factor in your home's | | | | differently. They will also have different procedures for |
| appreciation when considering your property's value. | | | | determining rates. |
| The PMI Factor | | | | To get the best deal, you have to rely on loan quotes |
| Private mortgage insurance may be required with | | | | to make your decision. By providing just the most basic |
| some lenders, especially if you have a prime loan. If | | | | information, you can get a general idea of closing |
| you have less than 20% equity in the home, then | | | | costs and rates. Only if you are serious about a lender |
| expect to pay premiums. But sub prime lenders don't | | | | should you allow them to access your credit report. |
| require insurance. And in some cases, if you use a | | | | Home equity loans can also be consolidated into one |
| separate lender for your second mortgage, you won't | | | | mortgage in the future. Make sure you don't have any |
| have to get insurance either. | | | | early payment fees that would make this decision |
| Interest Is Tax Deductible - Sometimes | | | | needlessly expensive. |