|
Home Equity Loan Information
A single non-revolving loan that allows a
borrower to tap into the equity in their
home to provide cash for other purposes
(including bill and debt consolidation,
making home improvements, college expenses,
etc.). Home equity is the difference between
the home’s present market value and the
balance of any outstanding mortgages or
liens. Generally this occurs as a borrower
either pays down principal on their first
mortgage or as the value of the home rises
while the mortgage balance remains constant.
A home equity loan generally takes the form
of a second mortgage; however, in the case
of a home with a clear title an equity loan
would take the form of a first mortgage. A
mortgage refinance can also take the form of
a home equity loan as it may allow the
consumer to take equity out of their home
(commonly called ‘cash out’).
Do not
make assumptions. If you are unsure about
anything...
ASK YOUR MORTGAGE COMPANY QUESTIONS!
1. Inquire about all fees and costs
associated with this loan, including the
home equity loan interest rate and APR (annual percentage
rate).
As with any
residential home loan....
2. Do not
assume that the interest of this
loan will be tax deductible. Consult a
qualified tax advisor for potential tax
benefits.
3. Be sure to ask if there is a
pre-payment penalty (prohibited by law in
some states) for paying off the loan
too early or making substantially large
payments against the principal.
|