Home Equity Loan

What is a Home-Equity Loan:

A home-equity loan is a loan in which you use your home as collateral for the loan.  With a
home-equity loan, you can either borrow a fixed sum or open up a line of credit into which
you can continually tap to finance more than one expenditure. Under the terms of a home-
equity loan contract, a lender may loan up to 75 percent of the value of the house, minus the
amount still owed on the original loan. Other lenders set their own limits of between $100,000
and $500,000.

Some Advantages of a Home Equity Loan or Credit Line:

A loan or line of credit against the equity in your home can pay for almost anything you want
to buy. You get an advantage in that you can deduct the interest you pay on up to $100,000
of a home equity loan, whereas you cannot deduct interest on other consumer loans.

Types of Home Equity Loans:

Home Equity Line of Credit

Variable rates as low as 7.25% APR (annual percentage rate).  This rate will change
semi-annually on February 1st and August 1st.  The rate is based on the Wall Street
Journal Prime Rate.

Fixed Rate Home Equity

Exactly that a fixed interest rate
Flexible loan terms
No payment for 3 months

Benefits of a Home Equity Loan:

A home equity loan enables you to qualify for a sizable line of credit at a low interest rate. 
Because the loan is secured by your home, all or part of the interest is tax deductible,
regardless of what you choose to use the money for.  Check with your tax professional to see
how the current laws apply to your personal situation.  A home equity loan involves variable
and fixed interest rates.

The Loan Guide provides access to free Home Equity Loan information.