Home Equity Loans
A home equity loan is one in which the borrower uses the equity in your home as security is called a Home Equity Loan (HEL). Equity is the value of your home less the amount of your mortgage. These types of loans may be used for major house repairs, college education or medical expenses. Home equity loans are very common and in order for you to qualify for these types of loans, you must have good to excellent credit history as well as reasonable credit-to-value and combined credit-value ratios.
A home equity loan generally come into two forms: Open end and closed end. Both forms are typically called second mortgages, due to the fact that they are secured against the value of a property much like a traditional mortgage. However, the home equity loan, which is close-ended, is usually used for a shorter periods than first mortgages. It is even possible to deduct home equity loan interest on your personal or general income taxes. Another loan that is similar to a home equity loan is a home equity line of credit which is considered open-ended. The biggest difference between the two is that the loan request in the home equity line of credit is not paid in full at any given time while in the home equity loan the amount is paid in one large lump-sum credit, often at a fixed interest rate. If you are seeking a home equity loan, you should know and understand the terms related to such loans. These include:
- Recourse and non-recourse loan. A recourse loan allows the lender to sue you if you are unable to repay your loan, even after they've seized the collateral. A non-recourse loan authorizes the lender to seize only the collateral and they cannot seek further funds from you through the courts.
- Secured and unsecured loan. All home equity loans are secured loans. Therefore the debt is said to be secured against the security, in this case the property. If for any reason the borrower cannot repay the loan given, the creditor takes possession of the property that was used to stand security and in most cases will either sell or auction it so as to satisfy the amount owed. By doing this the creditor will regain the debt originally lent to the borrower. Debt such as that of a credit card is unsecured debt due to the fact that no set asset as been used to stand security for your card. However, when you use a home equity loan to repay your credit card debt it is automatically converted to a secured debt.
- Dischargeable and non-dischargeable debt. A dischargeable debt is one that the borrower does not have to repay if he files for bankruptcy. This includes credit card, personal loans and guaranties. A non-dischargeable debt is one that the borrower has to pay whether he files for bankruptcy or not. These include student loans, child support and taxes. Home equity loans are a great way of creating much needed income to start or build your business without having to look too far for suitable collateral.
Like so many online financial sites, iBank.com offers you the opportunity to compare rates and quotes from hundreds of home mortgage lenders. Unlike the other lending sites online, iBank.com is a third-party referral service, which means there's no bias in the listings. In addition, iBank.com uses a highly encrypted vault to store your information, a security measure you won't get from other lending sites. Register here with iBank.com today.
| Type | Amount | Location | Date Posted |
|---|---|---|---|
| Home Equity | $50,000 | Phoenix, AZ |
Sep 2, 2010 10:53:00 AM |
| Home Equity | $50,000 | Galena, MO |
Aug 3, 2010 1:30:00 PM |
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