| The sense of equity generates from the amount | | | | equity line of credit elongates to the point |
| judgment of your investment at the time of | | | | of payment structure. In case of fixed rate |
| purchasing or refurnishing a property. As the | | | | home equity loan, you can avail the amount of |
| value of the fixed assets at most of the time | | | | money for a certain period of time, and you |
| matures, so also the equity value of an asset | | | | have drawn the entire amount at the time of |
| increases. For that reason, the value of your | | | | the closing. But in the second case, the loan |
| home has increased from the time you have | | | | amount is available as a series of lien. If |
| purchased the property. As the owner of the | | | | you are in a need of urgent fund of large |
| house, now you own a certain property value | | | | amount, then it is advisable to go for the |
| that if transferred into a liquid form like | | | | standard home equity loan with fixed interest |
| money, can serve various purposes for you. A | | | | rate, rather than home equity line of credit |
| fixed rate home equity loan can exactly do | | | | loan. |
| this job for you. | | | | |
| | | | A fixed rate home equity loan is generally |
| A home equity loan is a kind of loan where | | | | comes up with a tenure period of 15 years. |
| you use the equity of your home as the | | | | With a reduced amortization, the home equity |
| security or collateral of the loan. If you | | | | loans closes with a due balloon payment. This |
| fail to pay off the loan amount, your lender | | | | huge payment is advised to avoid by |
| may encroach into your home. The difference | | | | refinancing or by paying above the minimum |
| between a FRM and a fixed rate home equity | | | | payment line. The amount of loan depends on |
| loan is that, the second one is generally of | | | | many factors like your income, credit |
| a short term period and in many cases a fixed | | | | history, the appraised value of the |
| rate home equity loan is considered as tax | | | | collateral etc. |
| deductible upon your personal tax returns. | | | | |
| | | | Generally, a fixed rate home equity loan |
| A home equity loan can be of two types - | | | | offers you to borrow on the 100% equity value |
| | | | of the home. Sometimes in case of over-equity |
| (i)Standard Home Equity Loan: This is also | | | | loans, you can borrow above the equity value |
| known as close-end home equity loan, or term | | | | of your home. For example, the 125% home |
| loan or a second mortgage installment loan. | | | | equity loan provides you the opportunity to |
| This type of loan generally comes up with | | | | borrow 25% extra amount of money on the |
| fixed rate. | | | | equity of your home. Generally, over-equity |
| | | | loans come up with high interest rates. |
| (ii)Home Equity Line of Credit: This type of | | | | |
| loan is also called a revolving credit loan. | | | | Fixed rate home equity loan charges you some |
| This generally comes up with an adjustable | | | | fees to along with its interest rate. |
| rate loan. | | | | Whenever, you are opting for a fixed rate |
| | | | home equity loan, scan every pros and cons |
| This difference between a normal home equity | | | | and then choose the best option available to |
| loan with fixed interest rate and a home | | | | suit your need. |