| When a homeowner is planning for a major home | | | | If home equity loan works like a credit card, why |
| repair or renovation, he has an option to apply for a | | | | should a homeowner bother to know about home |
| home equity loan to finance the expenses of a repair. | | | | equity loans when he could anytime use a credit card |
| Homeowners who are considering a home equity loan | | | | to finance minor or major home repairs? |
| should learn the basics of this type of loan so as to | | | | Although a home equity loan and a credit card have |
| know if this is something that they can benefit from | | | | lots of similarities, the former has more advantages |
| and, of course, afford to pay. | | | | as compared to the latter. A home equity loan is |
| Mortgage vs. Home Equity Loan | | | | friendlier to homeowners. The interest rates are |
| If one would look closely, home equity loan | | | | much lower and a borrower can apply for tax |
| resembles mortgage in that the home is used as a | | | | incentives and interest deductions under the federal |
| security for the loan. However, the similarities end | | | | law. Credit card owners don't enjoy these types of |
| there. Home equity loan or home equity line of credit | | | | incentives and deductions. |
| (more known as HELOC) is more flexible than a | | | | Is it for you? |
| mortgage in terms of the amount to borrow and the | | | | It is true that a home equity loan has many |
| payment terms. | | | | advantages. Aside from that, it is very easy to apply |
| A home must not have an existing lien (or an existing | | | | for and get approved of. However, this type of loan |
| mortgage) in order to qualify for a mortgage | | | | is not for everyone. A borrower who has the |
| application. With home equity loan, a homeowner can | | | | compulsion to purchase until the credit limit is met is |
| apply for one with or without an existing home loan. | | | | not the ideal candidate for a HELOC. |
| Although home equity loan sounds like a second | | | | Remember that the equity for this type of loan is a |
| mortgage, it is not. It differs from second mortgage | | | | home. If a compulsive borrower and spender failed to |
| in terms of payment terms. A second mortgage has | | | | pay within the specified payment date and even |
| a fixed payment scheme and interest rates while a | | | | after extending his payment terms, his home would |
| home equity loan has a flexible one. | | | | be foreclosed. |
| What's more, a homeowner can use home equity | | | | This type of loan is best for people who has an |
| loan to borrow small amount of money, say to | | | | immediate need for money -- whether it would be |
| finance a minor kitchen improvement. He can borrow | | | | used for a home renovation or to pay for tuition -- |
| small or big and pay short or long, just like a credit | | | | and is expecting money within the payment period. |
| card. | | | | If used wisely, a homeowner would benefit greatly |
| Home Equity Loan vs. Credit Cards | | | | with a home equity loan. |