Mortgage RefinancingHome Loan Mortgage Refinancing, Home Equity Line of Credit, Debt Consolidation, Home Purchase Mortgage Loans |
|
|
Home equity loan (HEL)There are many advantages to having equity in a home so home equity loans are often reserved for major important purchases such as home improvements/repairs, education, medical expenses, or conservative investments. Simply using the loan for everyday purchases is not recommended because it will push a homeowner into debt. Because these loans are secured by equity in a home the interest rates are relatively low. In most cases the lenders have second position liens on a home. These liens must be paid off when a home is sold so the lenders are guaranteed payback unless a home decreases in value. This makes it possible for banks to offer lower rates on a home equity loan as opposed to personal loans and credit cards. Not only does a homeowner benefit from lower interest rate with a HEL but they can also write off interest paid. This results in even further savings over unsecured loans and loans secured by other assets. |