Everybody has heard the phrase "home equity loan" but not everybody knows what it is. This article is for people who have asked "what is a home equity loan?" who were not satisfied by the dictionary's definition and would prefer a simple and easy to understand explanation.
So what is it? A home equity loan is a loan that uses the borrower's equity to secure the loan. Basically, the person who takes out this type of loan is putting their home up as collateral. It can be used for a variety of purposes and the interest is often tax deductible. Typically they are used to make home improvements though they are sometimes used for other purposes as well (paying off other debts, buying a car, etc). The loans are granted at either an adjustable rate or a fixed rate. The repayment plan is usually shorter than your first mortgage. Typically a mortgage takes thirty years to pay off while a home line of credit usually only takes fifteen.
Some tend to think this type of loan is an easy way out of a financial crisis, but the truth is that a it is a large risk to take. After all, your home is at stake here. If you default you could lose your home and then where will you be? You will also want to be very careful about the institution through which you obtain your loan. There are a lot of scams out there that you will want to be careful of. Make sure you always read the fine print.
Make sure you weigh all of the options that are available to you before you sign on that dotted line.
Get your questions answered today at http://www.100homeequity.com where you will find out what is a home equity loan and the lowest home equity loan rates. Don't pay too much for your 100% home equity loans.
Article Source: http://EzineArticles.com/?expert=Max_Suther
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