Home Equity Borrowing Test | What's Your Maximum Borrowing Potential | Smart Money-Saving Way to Borrow | Understanding H.E. Borrowing | How They Work | How to Choose a H.E. Loan | What Type of Loan is Best For You? | Home Equity Borrowing Tips | How to Apply | Closing On Your Loan

Understanding Home Equity Borrowing

Home Equity credit is always just that... borrowing secured by the equity in your home. It's basically a second mortgage. You've probably heard of three different types of home equity credit: Home Equity Loans, Home Equity Credit Lines, and Home Improvement Loans.

Here's the difference...

Home Equity Loans are installment loans. You receive the entire amount of the loan immediately and repay a portion of the amount plus interest monthly.

Home Equity Credit Lines are revolving loans that work a little like credit cards. You borrow when you need to, up to your line of credit (the maximum amount of credit available to you). You repay a portion of the total balance, plus interest, each month.

Home Improvement Loans are a form of Home Equity Loans. The money disbursed may be used only for home improvements. In some States however, where Home Equity borrowing is not available, an unsecured Home Improvement Loan may be offered to you.

Reverse Mortgages are a type of first mortgage. They allow you to live off the equity in your home. The money borrowed, plus interest, is taken out of the value of the home when it's sold. This type of loan may be an option if you're a retiree with little income and a large amount of equity in your home. Use caution making this kind of arrangement, though. We're all living a lot longer these days.



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