Home Equity and Refinancing
Home Buying

How do home equity loans work?

606162

Top Answer
User Avatar
Wiki User
2013-04-03 01:03:44
2013-04-03 01:03:44
Answer

A home equity loan is a way of cashing out your investment in your house.

Basically you're borrowing against your investment -- your equity-- in your home. Example: Suppose you bought your house ten years ago for $100,000. Today, it's worth $120,000. You have paid off $20,000 in principle. So, your current mortgage is for $80,000 and your home is worth $120,000. A home equity loan would allow you to borrow $20,000 - $40,000.

Be aware that many, many people are using home equity loans to finance elaborate vacations or spending sprees, which most financial advisors discourage. Such a move usually reduces your net worth to zero -- or below. That's money you will have to pay back, usually before you retire.

Home equity loans may be a wise choice if a)you use them to finance education, b)you use them to pay off high-interest credit card debt or c) you invest the money in an asset that returns more than real estate.

For most people, whose home is their single largest investment and who need to pay it off to retire -- home equity loans are not great ideas.

A home-equity loan, also known as a second mortgage, lets homeowners borrow money by leveraging the equity in their homes. Home-equity loans exploded in popularity in 1996 as they provided a way for consumers to somewhat circumvent that year's tax changes, which eliminated deductions for the interest on most consumer purchases.

1
๐Ÿ™
0
๐Ÿคจ
0
๐Ÿ˜ฎ
0
๐Ÿ˜‚
0

Related Questions

User Avatar

You can apply for mobile home equity loans online at the website, MountainSideFinancial. They are the nations current leader for mobile home equity loans.

User Avatar

Everyone does not need equity loans for their home. Equity loans are only needed if the home-owner does not have sufficient funds to continue paying for the home in question.

User Avatar

Information on home equity loans in Columbia can be obtained from many Colombian financial websites that offer home equity loans. One example of a site that offers home equity loans in the Columbia Bank.

User Avatar

Equity Loans is a company that offers mortgage solutions to people. They assist with paper work and all the loan related work when a person is buying a home.

User Avatar

One may find information on fixed home equity loans by using the website "Zillow". They a great FAQ (frequently asked questions) section that explains how these loans work.

User Avatar

Absolutely! Home equity loans enable homeowners to get cash out of the equity in their home. As Homeowners pay down their mortgage, they build equity; equity is also built as a homeรขโ‚ฌโ„ขs value increases. You can borrow against your equity in your home. To check out more about home equity loans visit LendingTree.

User Avatar

There are many places where one can find home equity loans at fixed rate. On the websites "bankrate" or "zillow" one can find home equity loans at fixed rate.

User Avatar

There are two banks that offer the lowest rate home equity loans. These two banks that offer low rate home equity loans are RBC and The Bank of America.

User Avatar

"The short answer to your question is yes. Home equity loans are designed to give the home owner the ability to access some capital by taking a loan against the equity in your home. These types of loans are often used for home improvement projects, and larger purchases as an alternative to using credit cards or other loans as home equity loans tend to be lower interest loans."

User Avatar

Home improvement loans are given to people who want to do renovations on their house. Home equity loans are loans that are given out with the assurance of the house.

User Avatar

One can find information on home equity improvement loans online on websites, such as Nationwide, Mortgage 101 and TD Bank. There are different types of home equity improvement loans.

User Avatar

Pioneer Credit Union offers auto loans, mortgage loans, home equity loans, home equity lines of credit, student loans, personal loans and business loans.

User Avatar

Home equity loans should have stronger restrictions for potential applicants.

User Avatar

Equity loans vary from owner to owner. To see how much equity loans you have on your home, you need to contact your real estate agent or broker. They can then give you the specifics on your equity.

User Avatar

Key Bank does offer home equity loans to those that qualify. They offer both standard and high value home equity loans, and also offer payment protection and online banking.

User Avatar

Countrywide Home Equity Loans offer borrowers the ability to use funds when they need based on the value of their homes. These loans can be used for home improvement projects.

User Avatar

No they will not. No one is giving no equity home loans right now. The best you can so is a personal loan.

User Avatar

No Equity Loans company offers home loans nationwide with no equity required. They provide loans up to $200,000 with adjustable and fixed rates with up to 125% of the home's value.

User Avatar

Wachovia, or Wells Fargo, offer Home Equity Loans in all 50 states. Wells Fargo Home Equity Loans have low interest rates, funds available anytime, and have no closing costs.

User Avatar

A home equity loan (sometimes abbreviated HEL) is a type of loan in which the borrower uses the equity in their home as collateral. These loans are useful to finance major expenses such as home repairs, medical bills or college education. A home equity loan creates a lien against the borrower's house, and reduces actual home equity.

User Avatar

Auto Loan vs. Home Equity Loan Home equity loans often have lower interest rates than auto loans and the interest may be tax deductible. Two good reasons to take a look at home equity loans to finance your automobile purchase.

User Avatar

Some banks that offer online home equity loans include the Royal Bank (RBC) and President's Choice (PC). In fact, most mainstream banks will have home equity loans and offer online services for them.

User Avatar

There are a number of reliable home equity lenders one could use in the Boston area. Wells Fargo have a good reputation and offer home equity loans. Mortgage Equity Partners and Citizens Bank also offer home equity loans.

User Avatar

GMAC home equity loans are such loans, where one can pay a part of the value of the home or property at the start and pay in parts later as they use it for their own needs.

User Avatar

One can find information on refinancing home equity loans at local banks, financing companies and credit unions. There are also several online sites one can consult for information on refinancing home equity loans.


Copyright ยฉ 2020 Multiply Media, LLC. All Rights Reserved. The material on this site can not be reproduced, distributed, transmitted, cached or otherwise used, except with prior written permission of Multiply.