| A standard
home equity loan is a loan against the amount of equity
in your home. The amount is given in one total amount,
and it usually has a fixed monthly payment and interest
rates. This type of loan is sometimes considered a second
mortgage.
You have many options that will determine the amount
you will pay over the term of the loan. Because lenders
are taking a larger risk with home equity loans than a
first mortgage, interest rates are usually higher on the
second mortgage.
Loan terms are usually shorter for second mortgages as
well, and a loan term can be anywhere between 3-15 years
in length. Keep in mind that the longer the term, the
more money you will be spending in interest over time.
If you sell your home, be aware that all lenders will
collect their payment first. The primary mortgage is paid
off first, then the second mortgage. Any left over amount
is given to the borrower. If the sale of the house does
not cover both loans, the borrower will still be responsible
for paying off any outstanding balances.
Home Loan Resources Index
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