Home Equity Loans - FAQ
What is Home Equity Loan?
Home Equity Loan is a type of loan which allows you to get cash loans based on the current value of your property minus the amount of mortgage that still needs to be paid off. Home equity loans are often taken to pay for many types of expenses such as home remodeling, college education, debt consolidation and others.
What are the advantages of a Home Equity Loan?
Home Equity Loan has two major advantages: tax savings and lower interest rate. The interest rate paid on your average Home Equity Loan would be lower than the interest rate paid on your average credit card or on other types of loans, such as a personal loan. By taking a Home Equity Loan, you can deduct the interest you pay which automatically lowers your payments.
What do people take Home Equity Loans for?
Home Equity Loans are usually taken to cover all kinds of large expenses, for example:
- remodeling and renovating the house,
- paying for college education,
- financing big purchases,
- consolidating high-interest debt.
How much can I borrow?
You can borrow up to 80% of your home value minus your mortgage. With the home value of $100,000 and a mortgage of $50,000, you can get up to $30,000.
What do lenders look at when a person applies for a Home Equity Loan?
When applying for a Home Equity Loan, lenders will check the following information:
- credit history,
- the amount of money borrowed compared to home equity,
- how much money is spent to pay other debts,
- employment history,
- loan purpose.