A home equity loan is a type of loan in which the borrower uses the equity in their home as collateral. House Mortgages has many different lenders that specialize in this type loan. These loans are a great way to finance major expenses such as college tuition, home improvements or medical bills. A home equity loan establishes a lien against your home which reduces actual home equity.
To receive a home equity loan, the borrower needs good to excellent credit and a reasonable loan-to-value ratio. Home equity loan are also called a second mortgage because they are secured against the value of of your house. Most of the time, a home equity loan is a shorter term than a first mortgage. Depending on your state, the loan interest may be deductable on your personal income taxes.
The difference between a home equity loan and a line of credit is the equity loan is a 1 time lump-sum loan and a credit line can be drawn on as needed and you can pay it down with no penalties. The lender will set a limit just like a credit card lender does and you are free to do as you please with the funds.