How does a home equity loan work?

0 votes
asked Jan 16, 2019 in Real Estate - Renting by RonaMeye (240 points)
How does a home equity loan work?

1 Answer

0 votes
answered Jan 18, 2019 by Gracy (125,580 points)
A Home Equity loan is just basically a loan that you borrow against based on the equity built up in your home.

So if you're paying for a mortgage or you own your home you could use your home as collateral and borrow money against the equity that is built up in your home.

The bank will loan you a lump sum of money for the amount of equity you have in your home and then you pay that money back in a certain amount of time and if not the bank can foreclose on your home.

Some people use home equity loans to pay off student loans and credit card debt or even borrow the money to use to remodel the home which can add resale value to the home.

But only get a home equity loan if you're sure you can pay it back in the set amount of time because if not you could lose your home.

98,443 questions

94,718 answers

1,269 comments

6,992,436 users

...