What is a home equity loan?
A home equity loan is a form of credit for which your home is pledged as collateral. Generally, home equity loans offer a fixed interest rate and a fixed monthly payment. A standard home equity loan (also called a second mortgage) is paid off over an extended period of time.
You can estimate your home equityEquity. The difference between the value of a property and any outstanding mortgage balance(s) or liens against it. Also referred to as owner's interest. by adding the balance of all the debts secured by your home, then subtracting the total from your home's value.
What are the primary advantages of a home equity loan?
The two major advantages of borrowing with a home equity loan are lower interest rates and potential tax savings:
Home Equity Loans The interest rate you will pay on the average home equity loan is generally lower than the interest rate you will pay on the average credit card or any other type of non-secured debt.
Home Equity Loans For home equity loans, you can generally deduct the interest you pay. The interest you pay on credit cards and other types of personal loans is generally not tax-deductible. Consult your tax advisor about the deductibility of interest.
