If you have owned your home for several years or more, you have most likely paid off part of the principal and have built up some equity. You can apply part of the equity in your home toward a home equity loan or home equity line of credit from LoanMerica.
The money you draw from a home equity loan can be used for a variety of reasons, including major expenses such as medical bills, college tuition or home improvements. The amount of the home equity loan will be subtracted from the actual equity in the home.
Both home equity loans and home equity lines of credit are commonly referred to as second mortgages. Because they involve smaller amounts of money, they are typically for shorter terms than first mortgages. Home equity loans can also be applied toward a home refinance. Another distinct advantage is that the interest on a home equity loan can be deducted from your personal income taxes.
The major difference between a home equity loan and a home equity line of credit (HELOC) is that the home equity loan is a one-time, lump-sum loan, usually with a fixed interest rate for the duration of the loan. With a HELOC, the borrower can choose when to borrow against the equity in the property, with terms of up to 30 years. Home equity lines of credit usually offer a variable interest rate.
A home equity loan comes with the same fees as a mortgage, whereas a HELOC may not have any fees at all. You make payments, including interest, only on the amount you spend.
If you think today is a good time for you to take advantage of low interest rates and put the equity in your home to work for you, give LoanMerica a call at (800) 391-9310. We'll help you decide whether a home equity loan or a home equity line of credit is the best fit for your situation.