Home Equity Loans
Home equity loans allow a homeowner to borrow money by pledging the house as collateral. Borrowers who want to borrow a relatively large amount of money or who don t have good credit often find the home equity loan to be attractive. A home equity loan is a type of second mortgage, not to be confused with a home equity line of credit. Lenders may be more liberal because they view home equity loans as relatively safe. You can t disappear with your house or hide it if you default on your loan, so the lender has a good chance of collecting the collateral. Also, you are likely to make your payments a priority if your home is on the line. Advantages of Home Equity Loans Home equity loans are attractive to borrowers for a few main reasons: • They typically have a lower interest rate (or
