Types of Home Equity Loans

January 4, 2009 by · 2 Comments
Filed under: Blog 

Home equity loans are a way of using the money that you’ve
invested in your mortgage by borrowing against it. Essentially,
a home equity loan is a ‘second mortgage’ – a loan secured by
your property. If you don’t make good on your payments, the
lending company or bank can force the sale of your house to
recover their money.

There are two major types of home equity loans – home equity
loans and home equity lines of credit, also called HELOCs. Most
lenders that offer home equity loans offer both kinds. A home
equity loan for $10,000 and a home equity line of credit for
$10,000 are two completely different animals though they have a
lot of similar features.

Home Equity Loan

If you apply for and are granted a home equity loan for $10,000
at 7% APR for 15 years, you will receive a check or a deposit to
your bank account of $10,000. That is the full amount of the
loan that you can ever draw on that particular application.
Depending on the terms agreed upon, you may have one to several
months before you have to begin repaying the loan. You’ll pay a
fixed amount every month until the full amount of the loan and
the interest charge is paid off. You’ll know from the very start
how much you’ll be repaying.

Home Equity Line of Credit

A home equity line of credit – a HELOC – is much more like a
credit card. When you apply for and are granted a home equity
line of credit, the bank establishes a ‘line of credit’ – which
functions just the way that a ‘credit limit’ does on your credit
card. You may receive special checks or a plastic card with
which to access your line of credit – but you don’t receive the
full amount at one time.

In fact, you don’t have to take any of it immediately. You can
draw on the line of credit at any time, up to the full amount of
the line of credit throughout the agreed-upon life of the loan.
Suppose that you’re doing some home repairs. You can use your
home equity line of credit to pay for $2,000 worth of roofing
tiles. That leaves you $8,000 in your line of credit. Three
weeks later, you can use your line of credit to pay for $4,500
worth of windows – and still have $3,500 left that you can
borrow against.

If you then start paying back on your home equity line of
credit, that money becomes available to you again. If you pay
back $1,000 of what you’ve borrowed, you now have $4,500 on your
line of credit.

A home equity line of credit has two ‘phases’ – there is the
draw period, during which time you can draw against the credit
limit as long as you stay below the limit. During that time, you
can elect to only pay the interest that accrues – or you can
make payments on the principal to free it up. Once the draw
period is over, you go into the repayment period. During the
repayment period, you can’t draw against the line of credit any
longer, and must make full repayment.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google Bookmarks

Tags:

Comments

2 Responses to “Types of Home Equity Loans”
  1. Sunshine8803 says:
    January 4, 2009 at 12:30 am

    Home Equity Loan with Life Estate on the Deed?
    My parents recently signed the deed of their house over to me with a Life Estate clause added to it so that they will still have a place to live. The intentions were for me to get a home equity loan in order to make some much needed renovations to the house, including a handicapped suite for the both of them to make them more comfortable. However, everyone with whom I have spoken has told me that with the life estate clause on the deed, it is impossible for me to secure a home equity or other type of loan, even if my parents cosign since they are the beneficiaries of the life estate. What options do I have so that I can get a loan for the renovations?

  2. mark m says:
    January 4, 2009 at 5:32 am

    You post your profile on this webiste and then lenders come to you. I recommend trying

    http://www.creditloansonline.com
    References :

  •  

    Why is it a must to Colon Cleanse?

    The more we indulge in unhealthy diets and food leaden with preservatives and chemicals, the more taxed our colons become! This is why it is imperative to give our colons a break every once in a while, by indulging in a colon cleanse. A colon cleanse assists our bodies in getting rid of the toxins, resulting in much cleaner insides! A good colon cleanse prevents constipation, and lessens the risk of developing colon cancer. Along with regular colon cleanses, it would also be advisable to ingest a diet rich in fiber. This is helpful, not only in the prevention of constipation but the start of eating a healthier diet as well!

    Sleep Aid RemediesYou Must Try!

    Sick of sleep deprivation? You are not alone! Countless others suffer from sleep disorders due to one reason or another, mostly related to stress. To help you sleep,  sleep aid remediesof all kinds are available anywhere and everywhere! It is good to do your research, as there different things give relief to different people, with warm milk and prescription sleeping pills ranking high in popularity.  Herbal infusions, herbal teas and soothing baths are also quick fixes, lulling the body into a state of relaxation. While it may be good to experiment, one must be careful not to get carried away with over counter pills! These pills still contain dangers and can be detrimental to one's health!

    Preventing Menopause Symptoms!

    If it were not for the nasty symptoms that accompany it, menopause would probably not be a big deal to most women. Unfortunately, menopause usually manifest with night sweats and hot flashes in tow, making it potentially embarrassing for any menopausal women to go out in public!
    To counter these horrible manifestations of menopause, a natural and safe progesterone cream called Hot Flash Freedom has a raving fan base of "I used to be miserable" women.  This is designed to counter hot flashes and night sweats! Many women are rejoicing, having found relief from hot flashes. They claim that Hot Flash Freedom can really stop hot flashes and night sweats! If you are one suffering from Menopause, then this product is definitely worth trying!

    Ideal Dentists in the Country

    I am sure that there are plenty of ideal dentists in the country, but here are just 3 examples that I want to tell everyone about! My Glastonbury Dentisthas always impressed me with his gentle manner and the great way he treats his patients! A Richmond Dentist, Dr, Charles Martin, is also equally brilliant. His expertise is what really keeps his patients coming back! I can truly say he is among the most talented Richmond Dentists out there! For those located in QuincyDr. Matazarro is a Quincy dentist that can put an end to your teeth problems. Lastly, in Kauai, Dr. Clyde Ishida is considered a wonderful Kauai Dentist. His patients really speak well of the services he provides for them. Do you have a great dentist in your area? Who do you recommend?

    A Stress-free Retirement

    A retirees common problems are disposing of a home they can no longer maintain and finding a home within a community that they will love. We have solutions for both problems! For the first, a sell house fast website is a quick solution that will give clients a wider client base that can span the entire country!

    For the second problem, an Assisted Living Decatur arrangement will more than suffice.Check online to find great, modern communities filled with perks like california synthetic turf golf courses riding stables, and exclusive retiree-only gated communities! These communities have proven to be an excellent backdrop for retirees excited to start new adventures!

    Business Finance OptionsFor The Start-Up

    Thinking of launching a start-up? Why not? Successful companies like Flower Essences once started out as start-ups! If you have a great idea, then you should really consider bringing it to life by taking a look at your business finance options! It might do you well to see what kind of funding you can expect from another party. Who knows? They might be able to come up with an arrangement that could work for you, and allow you to be your own master!

    Tips to a Successful Online Business

    To run and manage a successful online business takes some serious internet savvy. Not everyone is able to get it right! From the get-go, we definitely advise to consultwith  a website designer to create a site that excellently markets your product. Next, you must focus on Search Engine Optimization to get your website noticed in the search engines! SEO is the method to do just that and more! A great example is this Environmental Services Company. They have covered both website and SEO bases so they can expect good traffic daily. Don't you want your website to enjoy the same position?

    How to Always Get SportsTickets

    For a family filled with sports addicts and kids, sports tickets along with a Disney Guide will always prove to be popular, and not to mention, easy gifts to get!

    A source for your Leafs tickets, Ranger Tickets, Celtic Tickets, Kings Tickets, Red wings Tickets, Dodger tickets, Magic Tickets, Heat Tickets, Angels Tickets, Charger tickets, Nationals Tickets, Cardinal Tickets,Packers Tickets, Giant Tickets, Seahawk Ticks, Raven Tickets, Clippers Tickets, Chief Tickets, Thunder Tickets, Redskin Tickets, Cowboy Tickets, Texans Tickets, Raider Tickets , Viking Tickets, Dolphin Tickets and 49ers Tickets online. It's the easiest way to get your family something that they are bound to love and remember forever!

    I, for one, always go online to buy by sons Ranger Tickets. Since every game is different, we make new memories every time! They love me for it!

    Professional Water Damage Cleanup Saved Our House

    I’ve experienced water damage at work but water damage in your own home is much worse. Thankfully, I didn’t have to deal with the water damage that we had at work but finding that a pipe had blown at our house was a real experience. I needed to get things back to normal as fast as possible for my kids. You wouldn’t believe the property lost; it ranged from books to gadgets to kitchenware. It’s hard to believe that so much damage could come from water. I tried to get started with the water damage cleanup right away but it became obvious pretty fast that I was out of my depth. Our neighbour kindly gave us a number of a water damage Orlando restoration company that could help us out. It was pretty late and I was afraid that they’d be closed. It turns out that these restoration companies are often available 27/7 which kind of makes sense since disaster strikes at any time of the day or night. They gave me a free telephone consultation. They responded pretty fast and they got the house cleaned up a lot faster than I could have ever managed. They also offered insurance billing services and I was glad to take them up on it. Not having to deal with insurance is definitely a load off. I’m glad that I have their number to call in the future. Hopefully, nothing like this ever happens again, but it’s better to have a number to call in case it does.