| If you are considering tapping into your home's equity | | | | or 20-year terms, these loans often feature fixed |
| to consolidate debts or do some home improvements, | | | | rates ranging from a few points higher than |
| you should know your options. Below, you will find the | | | | conventional first mortgages to rates in the low double |
| three most common equity loan types available: | | | | digits, depending on your credit rating. |
| 1. Home Equity Line of Credit (HELOC) | | | | 3. The Over Equity Mortgage |
| The first type is the HELOC. With this option a lender | | | | For borrowers with no equity in their homes |
| will give you a line of credit equal to a predetermined | | | | whatsoever, there is a third option: the over-equity |
| amount of your home's equity. You can then draw | | | | mortgage. Although risky to lenders and consumers, |
| money out as you wish and only make payments on | | | | these loans where you can borrow up to 125% of |
| what you take. This works well for long-term home | | | | your home's value can save you a lot of money when |
| improvement projects where you will need to | | | | debt consolidating and can be great for smart, |
| frequently buy materials, but do not need all of the | | | | value-enhancing home improvement projects. Even |
| money at once. Typically these loans have adjustable | | | | with extremely high interest rates, these loans are still |
| rates tied to the prime rate. | | | | good options for borrowers unable to find unsecured |
| 2. Fixed Term Second Mortgages | | | | loans that meet their needs. |
| This lump-sum mortgage gives you a certain amount | | | | Now that you know your options, you will want to |
| of your equity at one time. Frequently, these loans are | | | | carefully consider which one is right for you and make |
| used for debt consolidation and can save borrowers | | | | a wise borrowing decision. |
| hundreds of dollars per month. Usually offered in 10, 15, | | | | |