Home Equity Loan: Is It Right For You?

Home Equity Loan: Is It Right For You?

Home equity loans are loans against the value of your home.  If you are still paying off a mortgage, you can usually borrow up to 75 percent against the part of the home you actually own.

There are several plusses when considering a home equity loan.  Borrowers see it as an opportunity to use the value of their home to obtain potentially more sizable loans at lower interest rates.  When interest rates are low in general, home equity loans can be very appealing.  Often home equity loans are used for major renovations or additions to the home, but they can also be used for an extensive range of other purposes.  Another key attraction of a home equity loan is that the interest you pay is typically tax-deductible.

Home equity loans are attractive to lenders because they see a secure lending risk with solid collateral, the house.  They will therefore, provide lower interest rates for such loans.

If you're considering a home equity loan, talk to a mortgage specialist or your CPA to see if this is right for you.