Home Equity Line of Credit Loans

A home equity loan is a kind of “second mortgage” can be secured by your home. Home equity line of credit loans are a way by which you can enhance your home value investing the amount in your mortgage. A home equity line of credit unlocks your home’s value so it can work for you. Owning your home can provide you with a financial resource that can help you with your financial needs.

There are two major types of Home equity line of credit loans – home equity loans and home equity lines of credit. Lenders prefer to offer both who are associated with home equity loans. A home equity loan for $20,000 and a home equity line of credit for $20,000 are two completely different loans though they have a lot of similar features.

Home Equity Line of Credit Loan

If you received a home equity loan for $20,000 at 7% APR for 15 years, you will receive a check or the amount will be deposited to your bank account of $ 20,000. This is the full amount of your required loan that you can ever draw on that particular application. Depending on the terms agreed upon, you may have one to several months before you have to begin repaying the loan. You'll pay a fixed amount every month until the full amount of the loan and the interest charge is paid off. You will be informed from the very start how much you'll be repaying.

Home Equity Loan - Line of Credit

Home equity line of credit is nothing but very much similar to a credit card. In a home equity line of credit loan you will be received a certain amount of credit limit as your credit card do while buying a limited priced products. You can’t go beyond the line of credit that the bank has decided for you.

You can’t get the whole amount at one time in home equity line of credit. The bank may issue special checks or a plastic card by which you will access you line of credit. In fact, you can draw on the line of credit at anytime, up to the full amount of the line of credit throughout the agreed-upon life of the loan.

Lets have an example, you have requirement of some home repairs. You can use your home equity line of credit to pay the amount required in renovation/repair. Suppose you need $2,000 worth of roofing tiles and other accessories and you have $20,000 in your line of credit. After drawing $2000 it leaves you $18,000 in your line of credit. Few weeks later, you can again use your line of credit and so on. And when you will start repaying of the above taken credit, that money becomes available to you again.

Suppose you have $5,000 left in your line of credit and you repaid $1,000, now you have $6,000 on your line of credit. There are two phases in a home equity line of credit. For more information please contact us.

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