| A home equity loan is a loan that is based on the | | | | low it is usually common for people to choose the |
| difference between the assessed value of your home | | | | fixed interest rate. Many people do not like to have |
| and what you currently owe on it. Banks will usually | | | | their monthly payments fluctuate so they choose to |
| recommend a home equity loan for people looking to | | | | lock in their rate and have the same monthly |
| consolidate high interest loans or credit cards as the | | | | payments. |
| interest rates offered for home equity loans are | | | | Variable rate loans are the other end of the loan risk |
| traditionally lower than those high interest rate products. | | | | spectrum and many people that have the option |
| Another reason people get a home equity loan is to | | | | choose to avoid them. With a variable rate loan your |
| pay for large purchases or pay large bills. If you are | | | | interest rate is evaluated on a regular basis, for terms |
| thinking of doing some major remodeling to your home | | | | outlined in the loan contract, and then your interest rate |
| then you may want to consider financing it with a | | | | is adjusted based on the going rate or the bank's |
| home equity loan. If you are trying to figure out how to | | | | current variable rate. The variable interest rate loan is |
| pay for your child's college education then a home | | | | one of the things that got so many people in trouble in |
| equity loan may be the way to go for financing your | | | | this recent housing crisis as variable mortgage rates |
| child's future. When it comes to the interest rate on a | | | | continued to rise well into the double digits causing |
| home equity loan you can usually choose from two | | | | many peoples' mortgage payments to skyrocket out |
| different kinds of loans. Home equity loans usually | | | | of control. The reason variable rate loans are available |
| come as either a fixed rate loan or a variable rate | | | | is because they are primarily used for people with less |
| loan. | | | | than desirable credit. If the bank does not feel that you |
| A fixed rate home equity loan operates the same | | | | are a borrower worthy of a fixed rate loan then they |
| way that a fixed rate mortgage does. The borrower is | | | | will only offer you a variable rate loan. |
| offered a fixed interest rate by the bank and if the | | | | You would always like to be able to choose the home |
| borrower signs on for that rate then the rate will never | | | | equity loan rate that is best for you but, depending on |
| change for the life of the loan. In some cases the | | | | your situation, you may have to take what they offer |
| borrower has the option of purchasing points at closing | | | | you if you want to use the equity you have spent |
| which means they can pay extra money to make their | | | | years building up in your home. |
| fixed interest rate even lower. In times when rates are | | | | |