| Home Equity Loan in terms of common man is, | | | | immediately after the money has been given. |
| by using an individuals home he can borrow | | | | And at the time of closing a lump amount of |
| money. In this case the property is used as a | | | | money can be borrowed and will not be able to |
| collateral guarantee for the money received. | | | | get further amount. The loan amount will be |
| It has been understood that the individual | | | | determined by analyzing the credit history, |
| has to repay the debt within a time frame, | | | | income and value of the collateral. For this |
| and if he fails to do so the money lender can | | | | type of loan they have a specific period say |
| sell the collateral and take his money back. | | | | up to fifteen years. |
| So, in this case the equity in the home is | | | | |
| used as collateral. If the debt has not been | | | | Home Equity line of credit will offer the |
| paid the concerned party will be forced to | | | | borrower a cheque book or a credit card which |
| lose his home. If the loan amount has been | | | | can be made used to borrow money against the |
| paid, in full then the property will be the | | | | home equity when and how often the concerned |
| buyers. Equity can be explained as the | | | | party requires the amount. Until a purchase |
| difference between the worth of the home and | | | | is made against the equity the interest will |
| how much loan exists on the mortgage and the | | | | not begin to accumulate. This type is also |
| banks will lend money against the equity | | | | known as open end home equity loan. The |
| only. This type of loan is taken for the | | | | period fixed generally to repay the loan is |
| purpose of major home repairs or | | | | over thirty years at a varied interest rate. |
| improvements, education expenses, wedding | | | | |
| expenses, medical expenses etc. | | | | Generally home equity loans have some |
| | | | specific fees and some of them are Evaluation |
| Home Equity loan can be classified into two | | | | fees, Inventor fees, Stamp Duties, Concluding |
| different types as, Traditional Home Equity | | | | fees, Arrangement fees, early pay-off, |
| Loan and Home Equity Line of Credit and these | | | | Surveyor or Conveyor or valuation. In some |
| are also known as second mortgages, as they | | | | cases, some of them may be ignored. This can |
| are safe by the security of property. These | | | | be increased or decreased if the concerned |
| types of loans are returned in a short span | | | | party has his personal surveyor to examine |
| of time than the first mortgage. | | | | the property. The fees differ from loan to |
| | | | loan so that the parties concerned must have |
| Traditional Home Equity Loan is also known as | | | | a clear picture in the beginning itself. This |
| closed end home equity loan which means the | | | | type of loan helps in tax savings because the |
| money borrowed must be returned or repaid | | | | interest paid against the home equity loan is |
| within a predetermined period. In this type, | | | | tax-deductible. |
| the interest will start to accumulate | | | | |