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Q.:
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What can I use a home equity loan for?
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A.:
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Just about anything! Many homeowners choose to put the money back into the house with home improvements or renovations. But others use home equity loans for college tuition, high interest debt consolidation, and even major new purchases.
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Q.:
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What kind of interest rate will I get?
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A.:
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While home mortgage loans still carry the lowest interest rates, home equity loan rates are surprisingly low these days, and they are sure to be lower than rates charged on credit card debt or personal loans.
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Q.:
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How long is a home equity loan term?
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A.:
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A home equity lender can work with you to find the term that is most appropriate for you. But most home equity loans carry terms of 10-20 years.
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Q.:
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How do I decide between a home equity loan and a line of credit?
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A.:
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It depends on what you are using the money for. A home equity line of credit is handy when you are not making a lump sum payment because you don’t pay interest until you have drawn on the credit line. A home equity loan will usually have a fixed home equity loan rate, leaving you less susceptible to market changes, while a credit line usually comes with adjustable-rate interest.
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Q.:
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How do I know how much I can borrow?
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A.:
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In addition to typical factors like income and credit rating, home equity lenders will determine the amount you are eligible to borrow based on the equity in your home. This is the difference between the current market value of your home and the outstanding principal on your home mortgage loan.
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