Home Equity Loan Rates

2007-03-08 10:33:40

( Financial )



A home equity loan is a loan that is based on the amount of equity you have in your home. To compute your property equity, deduct the value of your current outstanding mortgage from its market value. What you have left over is the equity; this is the amount you would have if you sold your home and repaid your mortgage. However, you do not necessarily have to sell your home to get your equity released. You can simply take out a home equity loan.

The amount of money you can borrow in an equity release loan is directly related to the amount of equity on your property. Creditors will usually offer equity loan rates on a percentage basis, such as eighty percent of your equity. There are, however, some lenders that will offer you a loan equal to your total equity. It is common sense, but only homeowners can benefit from home equity loans.

If you need a substantial amount of cash above and beyond what you can get using your credit cards, a home equity loan is probably your best option. Keep that in mind. A home equity loan will not be advantageous for you if you only need relatively small amounts. Equity loan rates can become relatively expansive, especially if not used for investment purposes.

A variety of equity loans are now available over the internet, so you should not have much difficulty finding a creditor. Shopping for a home equity loan online also allows you to compare and contrast the equity loan rates that various lenders offer. It also allows you to procure information about other ways of raising money.

Home equity loans, like many other loans, have two main modes of repayment. You can either make capital and interest payments or interest only payments. Capital and interest payments cover both the interest on the loan, as well as a reduction on the principal. Interest-only payments simply cover the interest on the loan, without touching the principal. When the term of the loan is over, appropriate arrangements must be made to pay down the principal.


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