What are Home Equity Loans?
A home equity loan is an agreement to borrow a lump sum against the equity in a home. It is similar to a normal mortgage or car loan in that you agree to pay off the loan over a set period of time with regular payments. Depending upon the loan, the interest rate can either be fixed or adjustable.
The loan is usually divided up into two periods:
How to choose between a home equity loan and a line of credit
This choice is not always straightforward. In general, the line of credit offers more flexibility while a home equity loan can offer a fixed rate for the term of the loan.
If you know when and how much you will need to borrow, and don't intend to borrow more money in the future, a home equity loan is usually more suitable. It allows borrowers, if they choose, to lock in a fixed rate for the term of the loan.
A line of credit, on the other hand, will allow you to borrow only the amount you need when you need it. If you will only need to borrow smaller amounts and intend to pay the principal down quickly, a line of credit can minimize your interest expense.
Mortgage Types - Fixed and Adjustable Rate Mortgages
Additional Types of Mortgages - Balloon, Two-Step, COFI, LIBOR
Other Mortgage Types
Mortgage Application Process
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