A home equity loan is typically a second mortgage. As such, it has a higher interest rate than a first mortgage, and a shorter time period to pay it back - up to 15 years.
A home equity loan can be used for any purpose. It has the best value, though, when used for renovations or improvements on your home. Besides adding to the value of your home (increasing equity even more), the portion used for your home improvement is usually tax deductible, too. This brings down the interest rate more when used for this purpose.
A home equity loan can also be obtained in two different ways. You can get them either as an adjustable rate mortgage, or as a fixed rate mortgage. This makes it most convenient, and gives you the flexibility of choice - based on the economy and your situation.
There are risks to consider when applying for a fixed rate home equity loan. The interest rate of a home equity loan may be fixed at a lower rate than that of a home equity line of credit. However, the risk in taking out a fixed rate home equity loan is greater because you're taking out all of your home's equity all at once. Also, if you sell your home, the entire amount of your fixed rate home equity loan becomes due.
Get a free consultation from this site to find out if a home equity loan is right for you. Submit our simple form and a debt consolidation professional will get back to you with all the answers in his hand.