What Is Home Equity Loan

A home equity loan or second mortgage can be a source of money to fund your major financial goals such as paying for college education or medical bills and can prevent building up credit card debt with high interest rates.

What is home equity loan. A home equity loan is a second mortgage that borrows against the equity in your home and uses your house as collateral to secure the loan. You can claim a tax deduction for the interest you pay if you use the loan to buy build or substantially improve your home according to the irs. What we like about home equity loans.

With a second mortgage you are putting up your home as collateral for the loan so if you default on this. A second mortgage paid in a lump sum and repaid in monthly installments. Home equity loans allow homeowners to borrow against the equity in.

Most home equity lenders allow you to borrow a certain percentage of your home equity typically up to 85 percent. A home equity loan also known as a home equity installment loan or a second mortgage is a type of consumer debt. Home equity line of credit heloc.

Similar to a credit card a line of credit with a limit for what you. Citation needed home equity loans are often used to finance major expenses such as home repairs medical bills or college education. You ll probably pay less interest than you would on a personal loan because a home equity loan is secured by your home.