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