Home Equity Loan : Everything You Need To Know

 What is a home equity loan?

      A home equity loan allows you to borrow against the equity of your home, which is the difference between what your house is worth and how much you still owe on it.  A home equity loan is a type of loan in which the borrower uses the equity in their home as collateral

Home Equity Loan

How does a home equity loan work?

   As above said a home equity loan is a type of loan in which the borrower uses the equity of their home as collateral. The loan amount is determined by the value of the property, and the borrower is typically required to make monthly payments on the loan.

Types of Home Equity Loans - 

Generally, there are two types of Home Equity Loan

1) Fixed Rate Loans

2) Home Equity Lines of Credit (HELOC)

Should you get a home equity loan?

 Actually, there is no specific answer as to whether or not you should get a home equity loan. Ultimately, the decision depends on your unique financial situation and whether or not you feel comfortable taking on additional debt. It is up to you if you need it you may get it.

Do you qualify for a home equity loan?

    To qualify for a home equity loan, you will need to have equity in your home. Equity is the portion of your home's value that you own, and it is calculated by subtracting the outstanding balance of your mortgage from the appraised value of your home.

Advantages of Home Equity Loan - 

👉 You can Borrow up to 80% of the appraised value of the home

👉 Low-Interest Rate: Home equity loan interest rates are generally lower than those associated with other types of loans, such as credit cards and personal loans.

👉 Home equity loans charge a fixed interest rate.

👉 Tax  Advantages: You get Tax saving advantages on Home Equity Loan

 👉 Home equity loans are for a fixed term, typically 10-15 years.

👉 A home equity loan is secured by the value in your home.

👉 Unlike mortgages and many other types of loans, home equity loans typically have no prepayment penalty. This means you can pay off the loan early without being required to pay any fees.

Disadvantages of Home Equity Loan

👉 Fees May Be Unexpected

👉 Another lien on your home

👉 Less Flexible Mortgage

👉 Home Eligibility Loan Requirement - 

👉 Sometimes it takes a long time to receive money. You may have to wait more than a month to get your cash.

👉 Home Equity Loan is Risky

Home Equity Loan FAQs 

Can I get a home equity loan with bad credit?

Most lenders require a score of at least 680 in order to get approved for a home equity loan, But some lenders also pay if your credit score is not good enough.

How much can you borrow with a home equity line of credit?

You can typically borrow up to 85% of the value of your home minus the amount you owe

How long do I have to repay the loan?

Home Equity Loan is better than a personal loan

See Also...

What is a Secured Loan 

Difference between Good Debt and Bad Debt

How to get out of debt: A step-by-step guide 

Post a Comment

Previous Post Next Post