subject: What Are The Advantages Of Home Equity Loans? [print this page] What Are The Advantages Of Home Equity Loans?
In case you are wondering what home equity loans actually are, it is nothing but a system through which homeowners borrow money by making use of the equity in their home. Now, equity is actually the appraised value of the home that remains after deducting the balance of a mortgage. Some lenders permit the borrowers to borrow up to 85% of this value which will hence enable a lot of homeowners to have access to cash so that they can make major purchases at extremely low costs. There are a lot of advantages of home equity loans and some of them have been discussed below. It is comparatively easier to qualify for home equity loans than some other forms of unsecured credit. By nature, a home equity loan is a secured loan that makes use of your home as the collateral. This actually places more risk on the homeowner than the lender. If there is a default in the loan, it could very well result in a foreclosure. As the risk of the lender is considerably low, the loans would not be requiring a good credit score. Before they grant you the loan, the lenders take your credit history, income and other debts into account. A home equity loan is also less costly than unsecured debt as the rates of interests are usually lower. As far as the interest rates of the home equity loans are concerned, they are much less than the home loan interest rates. The percentage of interest will depend upon the actual cost of the loan. If you are wondering whether the interest that is paid on the home equity loan can be deducted from the tax or not, you will be happy to find that it actually is. You need to consult your tax professional to find out whether you would qualify for the tax savings before getting the loan. One of the best things about home equity loans is the fact that they are extremely flexible. They can be used in any way necessary and can be used for home improvements as well. You could take the home equity loan to enjoy a vacation or make an important investment.
