Home Equity Loan

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Related to Home Equity Loan: Home Equity Line of Credit

Home Equity Loan

A loan in which the one borrows against the value of one's home. That is, the collateral of a home-equity loan is one's house. The amount in these loans is generally the difference between the homeowner's equity in the house and the market value of the house. The homeowner receives the amount of the loan in a lump sum, and may use it to finance other purchases or ventures. If a home-equity loan is not paid off, the lender may take possession of and sell the house in order to pay for the loan; this can occur even if the homeowner continues to make payments on his/her mortgage. These loans generally have variable interest rates, which are nonetheless still lower than most other lines of credit. Home-equity loans are sometimes called second mortgages or equity loans. See also: Reverse mortgage.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Home equity loan.

A home equity loan, sometimes called a second mortgage, is secured by the equity in your home.

You receive the loan principal, minus fees for arranging the loan, in a lump sum. You then make monthly repayments over the term of the agreement, just as you do with your first, or primary, mortgage.

The interest rates on home equity loans are generally lower than the rates on unsecured loans. However, when you borrow against your equity you run the risk of foreclosure if you default on the loan, even if you have continued to make the required payments on your first mortgage.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

Home Equity Loan

Same as Second Mortgage.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.
References in periodicals archive ?
These strategies may destroy your budget to pay the first mortgage, if not your payments on a Home Equity Loan. Do not do anything for you must determine when is the right time to refinance your mortgage.
In general, home equity loans represent borrowings other than the indebtedness incurred in acquiring a principal residence and/or a second home.
They take many forms, the most common being home equity loans, home equity lines of credit, "cash out" home refinancing, student loan consolidation programs, and personal loans through financier institutions,
HOEPA applies to closed-end home equity loans, excluding home purchase loans and reverse mortgage loans, that bear rates or fees above a specified percentage or amount.
A word of caution, however: Home equity loans and lines of credit put your home on the line.
At this higher income level, "A" is restricted to claiming the standard deduction on his tax return, thereby losing any previous benefit, however small, associated with the interest paid on an acquisition debt or a home equity loan. "B," on the other hand, loses only a portion of the excess itemized deductions, but the disallowance of $4,247 decreases the tax savings associated with the interest paid.
Loans secred by a principal residence, including first and second mortgages home equity loans, and refinanced mortgages are includable in the definition of mortgage interest.
This question is particularly significant because home equity loan rates are adjustable.
Synopsis: Home equity borrowing has grown rapidly during recent years, with one in four homeowners reporting they have both a first mortgage and a home equity loan or line in a new Experian/Gallup poll.
A 0% credit card rate is far better than a 12% home equity loan. You must do the math," says Scott Bilker, founder of DebtSmart.com and author of Credit Card and Debt Management (Press One Pub; $19.95).
If you're interested in finding out how a home equity loan or line of credit can work for you, call the NEA Home Financing Program at 1-800-NEA-4-YOU (1-800-632-4968).

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