For a lot of you who would like to know what home-equity loan is, it is also the second mortgage. This allows homeowners to borrow money by matching the equity in their homes. It started to become popular in 1996 because it gave consumers the chance to adjust to any tax changes.? Homeowners may loan up to $100,000 and can still deduct the interest the moment they file their tax returns.
There are actually two types of home-equity loans, the Fixed Rate Loans and The Home-Equity Lines of Credit, although both these types have terms that range from 5 up to 15 years. And the moment that their home is sold, the loans must be fully repaid.
The difference of the two types are:
- With fixed-rate loans, the borrowers have a single and lump-sum payment that also has a scheduled time frame and fixed interest rate. This remains the same as long as the loan exists.
- With Home-Equity Loans, or home-equity line of credit, is similar to the credit card.? It has a variable-rate and the monthly payments vary based on the borrowed amount and the present interest rate.
This type of loan, however, is beneficial for responsible borrowers.? If you are the borrower who has a stable and steady income, then the tax deductibility of the paid interest can benefit you the most.? The fixed-rate home-equity can work for you since this system helps you to cover a single large purchase and still be able to answer to an unexpected medical bill or college tuition.
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Source: http://www.financebroker.com/loans-2/what-is-home-equity-loan/
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