The Basics of a Home Equity Loan

A home equity loan can be an good source of funds for many reasons: Tax deductible interest, no change in your existing first mortgage, low interest rates, no mortgage insurance is required, and you can use the loan for any purpose.

A home equity loan offers a fixed rate, fully amortized loan with a choice of terms from 5 to 20 years. The payments remain constant for the life of the loan.

Home equity loans are placed in second position on the property title, and will not change the terms of your existing first mortgage, so if you currently have a low rate on your existing mortgage, it remains the same.

The interest on a home equity loan may be tax deductible. You can deduct the interest on a loan of $100,000 up to 100% loan to value. Higher amounts are allowed if used for home improvement. Check with a tax advisor for details.

If you are considering a home equity loan to pay off credit cards, there are three ways you could save money: Reducing your interest rate, converting compound interest into a simple interest loan, and the interest write off.

Home equity loans do not require any mortgage insurance, unlike a refinance where lenders do require insurance if the loan amount exceeds 80% of value.

For homeowners with little or no equity, loans are available up to 100% of value, and if more is needed, second mortgages are available up to 125%.

Using home equity as a supplement for income. Some information for those faced with the need to use their home equity for personal cash out.

Using your home equity for home improvement. Which loan type is best for improvements, home equity loan, second mortgage, or a credit line?

Some Tips for comparing mortgage loan rates. Getting accurate mortgage loan rates on home loans, second mortgages and home equity loans.

What lenders look for in a mortgage application. Guidelines that lenders use to qualify applications for new home loans and home equity loans.