If you need money and don’t want to take out a high interest personal loan you can always consider a home equity loan if you are a home owner. Home equity loans are becoming more and more popular because you can still deduct the interest when you file your taxes. A home equity loan can allow you to borrow as much as one hundred thousand dollars.
This money can be used for home additions, paying of debt, college education and whatever else your heat may desire. A home equity loan is a loan that is taken out against the equity put into your home. This makes taking out a loan so much easier than having to apply for money through various banks.
Types of Home Equity Loans
When it comes to home equity loans there are two main types, a fixed rate loan and a line of credit loan. Each of these loans ranges in time frames from about five to fifteen years in length and both have varying rates of interest. The amount of interest that is paid on a home equity loan is determined by your actual credit rating and the amount of equity you would like to borrow.
Fixed Rate Loan – Fixed rate home equity loans give the borrower a singe payment that is paid back over a specified amount of time under a specific interest rate. The payments as well as the interest rate are fixed and will never vary. This type of loan is somewhat like paying off a credit card or even a car loan.
Home Equity Line of Credit – This loan may be somewhat risky as far as interest rates are concerned. The interest rate on this type of loan will almost always vary according to the market. Whit this type of home equity loan you can take out as much or as little money as you want by using a credit card or even checks. You are typically approved for a specific amount of money as the first step in this process. This home equity loan is kind of like having a savings account that you can withdrawal from at any time.
Benefits of a Home Equity Loan
Home equity loans are great because they can help you to increase the value of your home. It is one of the smarter ways to borrow money as well. Since you can claim the interest on your yearly taxes it is valued and a very financially fair concept. With a home equity loan not only can your dream kitchen be within your grasp but so can a college education or even a dream vacation.