A type of loan where the debtor applies the equity in their house as collateral is called a home equity loan. This loan is typically given in a lump sum with a fixed interest rate. Many people use it to finance large expenses such as home renovations, medical fees or higher education. A home equity loan makes a lien against the debtor's house, thus reducing actual home equity. Having an excellent credit history is one of the first steps that can qualify you for a home equity loan (HEL).
HELs are normally referred to as second mortgages, because like a conventional mortgage, they are secured against the worth of the home. Home equity loans are often used for a shorter loan term than first mortgages. To determine whether you can deduct home equity loan interest from your income taxes, consult a tax authority.
No comments:
Post a Comment