Home Equity Loans
Definition & Recommendations for Home Equity Loans
A home equity loan is must like any other type of loans except that home equity loans are secured by a second mortgage on your home. In essence your home is being used as collateral for your loan.
Home Equity Loans (HEL) should not be confused with Home Equity Line of Credit (HELOC). HEL loans don’t have the facility of a revolving line of credit and are essentially straight up loans where the customer can borrow between 70-90% of their home values.
Generally home equity loans have the most competitive interest rates of any loan type because it is secured by your home. It is because of this that the risk seen by the financial institution is reduced substantially and thus the more competitive rates. As with other sorts of loans, the payment amounts are tax deductible. Additionally, the interest rates can either be specified as fixed or variable. Generally variable would again be cheaper because the financial institution isn’t locked down with interest rate risks.
Again as with other types of loans, home equity loans for people who suffer from bad debt is quite common. The trick is trying to find a lender that doesn’t over-charge for the credit risk. Our lists of partners listed above have great rates which are only marginally above standard. They service most customers, even those with extremely poor credit history.
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