Guide to Home Equity Loans Chapter: 1 2 3 4 5
Introduction to Home Equity Loans
Remember the day when you purchased your home? You signed away your life so that a mortgage lender would hand over lots of money. That nervous moment was the beginning of your home equity journey.
What's home equity?
You've heard people talk about home equity in knowing voices. And you've probably seen it mentioned in the colorful ads spilling out of your Sunday paper. But what exactly is it? It's like a riddle…something you can't see, touch, or smell.
Table of Content
- 1. Introduction to Home Equity Loans
- 2. Home Equity Lending Lingo
- 3. The Home Equity Family Tree
- 4. Choosing the Right Home Equity Financing
- 5. Funding a Home Equity Loan
When you have equity in your home, the bank will lend you money. It's an asset with a measurable value. Lenders are happy to accept it as a security deposit against your debt.
In return for lending you all that money, the bank takes an ownership stake in your home. But-and this is important-that stake is limited to the amount of money you actually owe them. When your house is worth more than what you owe, the excess value belongs to you, free and clear. That amount will vary, though, because home values and loan balances change over time. If the home's value drops, your equity goes down. If it increases, your equity accompanies it into higher levels.
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