A home equity loan is a second type of mortgage where you borrow against the value of your home in addition to the amount of your other outstanding real estate mortgages.
Equity is the portion of the house you paid off, i.e. your share of the property, not the creditor's. In practice, home equity is the home's assessed value minus the outstanding balance on mortgages and loans.
When you get a Home Equity Loan, you receive a lump sum in cash and pay it off in monthly installments over a certain period of time.
The interest rate is determined at the time the loan is taken and must remain the same for the entire life of the loan. Each monthly payment reduces the loan balance and covers a portion of the interest expense. This is called an amortization loan.
If a home equity loan isn't right for you, there are options other than credit cards and personal loans.
Equity secured loans have different terms. You can usually find a home equity loan with a term between 5 and 30 years, depending on your needs and financial situation.
You can get more than one Home Equity Loan, but this can be difficult. The home must have sufficient assets to support a major mortgage and a few additional loans.
Also, many creditors won't want to be number three to pay off their debt if they're in financial trouble.
Home Equity Loan can be used for almost any purpose, but not all potential uses are financially sound.
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