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Home Equity Loan Facilities
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| Home equity loans are much like other
forms of loans except the fact that they are secured by a second
mortgage on your home. Thus, in Home Equity Loan your home is used
as the collateral to cover the risk of the lender. The interest
rates are usually fixed and the loan is usually short-term,
especially compared to the original home loan tenure. |
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Home Equity Loan, Home Equity Loans |
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Home equity loans allow a homeowner to
make repairs or other home improvements, refinance other debt, or
use for general purposes. Unlike a home equity line of credit, a
home equity loan is an amortizing loan.
Home equity is calculated by deducting what you owe from what your
home is worth. In general, you can take a loan up to 80% of the
market value of your home. Home equity loans offer low fixed rate,
tax deductible access to your home equity to pay off your debts,
improve your home, or get cash for any purpose, without refinancing
your existing mortgage.
A fixed rate home equity loan provides you with consistent monthly
payments for the life of the loan, regardless of changes in the
interest rates. There is a one time distribution of funds at the
closing of the loan, which you can use for any purpose. Fully
amortized home equity loans are paid off at the end of the payment
terms, which can range from of five to twenty years.
Because home equity loans are placed in second lien position on your
property title, there is no need to refinance your existing
mortgage, so if you currently have a low rate mortgage, it remains
the same. However, if you have existing home equity financing, it
must be paid off with the new loan, so be sure to request a
sufficient loan amount.
Home equity mortgage interest on your primary residence can be tax
deductible within the allowable guidelines. The current deduction is
up to $100,000 with a maximum 100% of value.
Facilities of Home Equity Loan
@ Low or competitive interest rates: As the loan is secured
and default risk for lender is low, the interest rate on home equity
loan is lower than any other unsecured loan such as credit card,
personal loan, etc. However, in some cases, the interest rate is
higher than that on a normal mortgage, as the home loan equity
lender holds only the second mortgage and not the primary mortgage.
@ Available with both fixed and adjustable interest rates.
@Tax deduction. Interest paid on home loan equity, in most
cases, can be used as a tax deduction.
@ Maximum use of your investment in home. Home equity is a
valuable asset and you can maximize benefits out of it without
selling it. |
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Home Equity Loan, Home Equity Loans |
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