Extra Cash

What is a Home Equity Loan?

Home equity is the current value of your home minus your mortgage balance. The equity in your home grows when you invest money in it-when you remodel for example-or when your property value increases. A Home Equity Loan or Line of Credit is a return on the financial investment, or equity, you've put into your home.

A Home Equity Loan or Line of Credit is a large loan at a low interest rate. Many homeowners use Home Equity loans for debt consolidation, house repairs, college tuition, or other large, substantial purchases. Home Equity Loans are usually tax deductible (consult your tax advisor).

Home Equity Loan, Home Equity Line of Credit. What's the difference?

A Home Equity Loan is a fixed-term loan: you are able to borrow a fixed amount of money for a fixed period of time and receive the total sum of money at the start of the loan.

A Home Equity Line of Credit is a revolving line of credit. Similar to a credit card, you are required to make a minimum payment every month based on the amount of money you borrow against your credit limit and you pay interest on the money you draw against your approved credit line.