Home Loans Austin

home equity for dummies

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Home Equity Loans – Discover. A home equity loan is essentially a one-time consumer loan using your home as collateral. If your home is worth more than you owe on it, you have equity, and may be able to use this equity to borrow money.

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A home equity loan is a lump-sum loan, which means you get all of the money at once and repay with a flat monthly installment that you can count on over the life of the loan, generally five to 15 years.

How Home Equity Loans Work. by Jacob Silverman. NEXT PAGE . A home equity loan may be just what you need to pay for a new nursery. See more pictures of investing. Photo courtesy stock.xchng. Imagine that you and your spouse have a baby on the way. You weren’t planning to start a family quite.

HELOC stands for Home Equity Line of Credit. It is a secondary mortgage loan based on the equity that is in a person’s home. These loans offer high limits with low-interest rates because you are putting up your home as collateral. This type of loan is different from your primary mortgage in that you don’t get a lump sum payment.

Instead of providing you with a lump sum as with a home equity loan, a HELOC lets you access the equity in your home on an as-needed basis, up to the full amount of your credit line. So if you have a HELOC, you simply write a check or draw down on your home equity using a credit card issued by your mortgage lender.

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A home equity loan, sometimes referred to as a second mortgage loan, usually allows you to borrow a lump sum against your current home equity for a fixed rate over a fixed period of time.

Equity is a complicated topic. People discuss owners equity, available equity, equity loans and a bunch of other things that relate to using equity. For the average investor this is REALLY confusing. So I have created this dummies guide to equity to really give you a base level understanding of exactly what equity is.

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