Home equity loans allow a homeowner to make repairs or other home
improvements, refinance other debt, or use for general purposes.
Unlike a home equity line of credit, a home equity loan is an
amortizing loan.
Home equity is calculated by deducting what you owe from what your
home is worth. In general, you can take a loan up to 80% of the
market value of your home. Home equity loans offer low fixed rate,
tax deductible access to your home equity to pay off your debts,
improve your home, or get cash for any purpose, without refinancing
your existing mortgage.
A fixed rate home equity loan provides you with consistent monthly
payments for the life of the loan, regardless of changes in the
interest rates. There is a one time distribution of funds at the
closing of the loan, which you can use for any purpose. Fully
amortized home equity loans are paid off at the end of the payment
terms, which can range from of five to twenty years.
Because home equity loans are placed in second lien position on your
property title, there is no need to refinance your existing
mortgage, so if you currently have a low rate mortgage, it remains
the same. However, if you have existing home equity financing, it
must be paid off with the new loan, so be sure to request a
sufficient loan amount.
Home equity mortgage interest on your primary residence can be tax
deductible within the allowable guidelines. The current deduction is
up to $100,000 with a maximum 100% of value. |