Line Equity

A home equity loan (sometimes abbreviated HEL ) is a type of loan in which the borrower uses the equity in their home as collateral. These loans are sometimes useful to help finance major home repairs, medical bills or college education. A home equity loan creates a lien against the borrower's house, and reduces actual home equity.

Home equity loans are most commonly second position liens (second trust deed), although they can be held in first or, less commonly, third position. Most home equity loans require good to excellent credit history, and reasonable loan-to-value and combined loan-to-value ratios. Home equity loans come in two types, closed end and open end .

Both are usually referred to as second mortgages, because they are secured against the value of the property, just like a traditional mortgage. Home equity loans and lines of credit are usually, but not always, for a shorter term than first mortgages. In the United States, it is sometimes possible to deduct home equity loan interest on one's personal income taxes.

There is a specific difference between a home equity loan and a Home Equity Line of Credit (HELOC). A HELOC is a line of revolving credit with an adjustable interest rate whereas a home equity loan is a one time lump-sum loan, often with a fixed interest rate.

When considering a loan, the borrower should be familiar with the terms recourse and nonrecourse loan, secured and unsecured debt, and dischargeable and non-dischargeable debt.

US traditional mortgages are usually non recourse loans. "Nonrecourse debt or a nonrecourse loan is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable." A US home equity loan may be a recourse loan for which the borrower is personally liable. This distinction becomes important in foreclosure since the borrower may remain personally liable for a recourse debt on a foreclosed property.

Home equity loans are secured loans. "The debt is thus secured against the collateral — in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to satisfy the debt by regaining the amount originally lent to the borrower." Credit card debt is an unsecured debt such that no asset has been pledged as collateral for the loan. Using a home equity loan to pay off credit card debt essentially converts an unsecured debt to a secured debt.

When deciding upon a type of loan, the borrower should also consider if the debt is dischargeable in bankruptcy. For instance, US student loans are "practically non-dischargeable in bankruptcy".

This is a revolving credit loan, also referred to as a home equity line of credit, where the borrower can choose when and how often to borrow against the equity in the property, with the lender setting an initial limit to the credit line based on criteria similar to those used for closed-end loans. Like the closed-end loan, it may be possible to borrow up to 100% of the value of a home, less any liens. These lines of credit are available up to 30 years, usually at a variable interest rate. The minimum monthly payment can be as low as only the interest that is due.

Typically, the interest rate is based on the Prime rate plus a margin.

Home equity loan fees

Here is a brief list of possible fees that may apply to your home equity loan: Appraisal fees, originator fees, title fees, stamp duties, arrangement fees, closing fees, early pay-off and other costs are often included in loans. Surveyor and conveyor or valuation fees may also apply to loans, some may be waived. The survey or conveyor and valuation costs can often be reduced, provided you find your own licensed surveyor to inspect the property considered for purchase. The title charges in secondary mortgages or equity loans are often fees for renewing the title information. Most loans will have fees of some sort, so make sure you read and ask several questions about the fees that are charged.

See also

• Home equity
• Mortgage equity withdrawal

1. ^ "Nonrecourse debt" . http://en.wikipedia.org/wiki/Nonrecourse_debt . Retrieved 2009-05-27 .  
2. ^ "Secured loan" . http://en.wikipedia.org/wiki/Secured_loan . Retrieved 2009-05-27 .  
3. ^ "Student loans in the United States" . http://en.wikipedia.org/wiki/Student_loans_in_the_United_States . Retrieved 2009-05-28 .  

Home Equity Line of Credit from TD Canada Trust

A home equity line of credit provides a flexible option to a traditional home loan. Find out if a TD Canada Trust home equity line of credit is right for you.

...

Home Equity Lines of Credit, Credit Line Rates, Prime Rate, Interest ...

Home Equity Line of Credit extends competitive lending quotes from home equity bankers who provide consumers with credit lines, interest only home equity loans, home improvement ...

...

Home Equity Line of Credit (HELOC) | Find Home Equity Line Rates From ...

Open a home equity line of credit (HELOC) from Nationwide Bank. Home equity lines give you access to needed funds for home improvements, educational expenses or bill consolidation ...

...

Home Equity Lines of Credit (HELOC) | American General Financial ...

With a Home Equity Line of Credit from American General Financial Services, you can tap into substantial buying power to meet other financial needs including home improvements ...

...

Home Equity Line of Credit | Best HELOC Rates & Refinance

Find the lowest home equity line of credit rate quotes and learn more about HELOCs. Use our home equity calculator to calculate your monthly HELOC payments.

...

Home Equity Lines of Credit and Home Equity Loans from U.S. Bank

Apply now for a U.S. Bank Home Equity Loan or Line of Credit. We offer competitive interest rates, no closing costs and low monthly payments

...

Equity Lines - Benchmark Lending

Equity Lines A Home Equity Line of Credit is a revolving line of credit that is linked to the equity you have in your home. You get cash on an as-needed basis and it works similar ...

...

New Line Equity

We are the most affordable pre-foreclosure acquisition company in the United States. We show people how to acquire the title of homes that are facing foreclosure in their desired ...

...

Equity Line of Credit, Home Loan, Low Rates, First Mortgage, Second ...

FundingUSA.com provides residential mortgage and loan modification solutions. Refinance, Purchase and Loan Modifications.

...

Amazon.com: Lines of Equity: Literature and the Origins of Law in ...

Amazon.com: Lines of Equity: Literature and the Origins of Law in Later Stuart England (9780801446726): Elliott Visconsi: Books

...