What Are Home Equity Loans
Your home equity loans, also commonly known as your equity loans, home equity installment loans, or your second mortgage, work as a kind of consumer debt for you. Your home equity loan allows you to get cash against the equity you have built up on your home. The loan amount you can get is based on the difference between the current market value of your home and the balance due on your homeowner's mortgage. Home equity loans have a general tendency to be taken out on a fixed-rate interest basis.
How the Home Equity Loan Works
Principally, your home equity loan can be compared to a standard mortgage; therefore, it is also known as a second mortgage. The equity in your home will serve as your collateral. The amount that you can borrow is partially based on your CLTV or combined loan-to-value ratio, which is 80-90% of the appraised value of your home. The loan amount and the interest rate will primarily depend on your payment history and credit score.
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Pros and Cons of Home Equity Loans
Getting a home equity loan is the best way of converting the equity you have built up in your home into ready cash. You can invest the cash for home improvements, which will in turn also enhance the market value of your property. However, be aware of the possible threat of putting your property at potential risk. If overall real estate values drop, you may find yourself owing a lot more money than the subsequent reduced value of your home.
For more information, the qualified industry experts of our Lend Me Money affiliate lenders will walk you through the process. Our Home Equity Loan Calculator is designed to help you do the calculations, with no outside help.
5.94 - 35.47% $5000 - $10000 700
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Min. credit score
5.94 - 35.47%
$5000 - $10000