What is a Home Equity Loan?

Home equity loans are loans that someone receives based on the value of a property. The property is appraised and that number is taken into account when you get the value of the loan. The appraisal is done by the lending institution from which you are receiving the loan. 

How are they used and how do I Obtain one?

Home equity loans are usually used to finance large expenses, for example, college, hospital or medical bills, or major home repairs. The way this type of loan works is, the lenders will do a home appraisal on your home. Once the appraisal is done, a form of a security interest, lien, is created which reduces the equity of the borrower's home. To qualify for a home equity loan, one must have a good to excellent credit score. A home equity loan is considered a "second mortgage" because of the security you gain on the property through this loan. By using home equity loans you are able to buy your own house. So, start finding homes for sale in NC. There are many fees when it comes to a home equity loan; including, appraisal, originator, title, arrangement, closing, early pay-off and inactivity fees. Not all of these fees will be applied to every case but every loan is different so be prepared for extra fees you my encounter.

Types of Home Equity Loans

There are two different types of home equity loans. Home-equity line of credit, also known as open-end and home equity loan, also known as a closed-end loan. Both of these loans are typically shorter than the mortgage for the home but that may not always be the case. Home equity line of credit offers revolving credit that also has an adjustable rate. You can also choose how often and when you want to borrow money and they are available for, at most, 30 years. A home-equity loan does not have adjustable rates all of the rates are fixed-rates. It is important to remember that you cannot use a home equity loan to buy a home. When you are looking for a way to finance big projects, college or medical bills, home equity loans are what you are looking for.

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