What is a Home Equity Loan?

Home Equity loans are loans that are secured by the borrower’s personal residence. These loans are written for a specific period of time with a fixed interest rate for the entire term. The borrower pays off the loan in monthly installments. A mortgage is recorded to secure the collateral. The mortgage is satisfied and the lien removed when the loan has been repaid. Interest on these types of loans may be tax deductible, see your tax advisor.

Uses for a Home Equity Loan:
Using the equity in your home can be a valuable tool for your financial journey.  Some examples of how equity can be used:

  • Home Improvements – Looking to refresh your home. Use your equity for desired upgrades such as; a new kitchen, landscaping, installing a pool, building garage… the possibilities are endless!
  • Home Repairs – Some repairs add up quickly. Use your equity for roof repairs, a new furnace, better windows and more.
  • Consolidating Debt – Utilizing the equity in your home can help you consolidate debt on personal loans or credit cards, which typically carry higher rates. This strategy could help you pay off debt sooner or lower monthly payments, depending on your personal financial goals.
  • Refinancing a Mortgage – Have you checked your mortgage rate or a while?  If your current mortgage rate is higher than home equity loan rates, you could benefit by reducing your rate and paying your home off sooner.

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