A home equity loan is often referred to as a second mortgage.This because it may be acquired while the homeowner is still paying the primary mortgage. Home equity is based on the appraised market value of the home minus the amount of principle, if any, still owed on any existing mortgages.

A percentage of this remaining value, or equity, is the amount of the new loan. Sometimes that percentage is more than 100% of the home. In bankruptcy or default terms, a primary or first mortgage is the default first lien against real property, while the second mortgage is a second lien.

Recent tax laws have inadvertently helped the popularity of home equity loans. Interest payments on such "luxury" loans as auto loans, boat loans, and other personal loans are not tax deductible. Real estate loan interest is tax deductible. Therefore, if one obtains a home equity loan to purchase a car or boat, that interest is then tax deductible.

Home equity loans come as lines of credit or fixed rate loans. They range from five to fifteen years in length. Interest rates are higher than first mortgages, but lower than credit cards. Lines of credit have variable rates and funds are drawn and repaid much like credit cards. The main difference from a credit card account is that the home equity line of credit has a fixed term and must be paid in full at the end of the term. This could result in a very large final payment. The fixed rate loan is taken all at once and may also have a large final or balloon payment, but the amount is determined at the beginning of the loan.

There are many uses for a home equity loan. One may consolidate smaller loans and credit card debt, make necessary or just cosmetic home improvements, or pay education costs or large medical costs. Lending institutions usually will not be interested in your intended use of the funds. They will concentrate on your credit history, economic assets, and current income-to-debt ratio.

This because it may be acquired while the homeowner is still paying the primary mortgage. Home equity is based on the appraised market value of the home minus the amount of principle, if any, still owed on any existing mortgages. A percentage of this remaining value, or equity, is the amount of the new loan. Sometimes that percentage is more than 100% of the home. In bankruptcy or default terms, a primary or first mortgage is the default first lien against real property, while the second mortgage is a second lien.

Recent tax laws have inadvertently helped the popularity of home equity loans. Interest payments on such "luxury" loans as auto loans, boat loans, and other personal loans are not tax deductible. Real estate loan interest is tax deductible. Therefore, if one obtains a home equity loan to purchase a car or boat, that interest is then tax deductible.

Home equity loans come as lines of credit or fixed rate loans. They range from five to fifteen years in length. Interest rates are higher than first mortgages, but lower than credit cards. Lines of credit have variable rates and funds are drawn and repaid much like credit cards. The main difference from a credit card account is that the home equity line of credit has a fixed term and must be paid in full at the end of the term. This could result in a very large final payment. The fixed rate loan is taken all at once and may also have a large final or balloon payment, but the amount is determined at the beginning of the loan.

There are many uses for a home equity loan. One may consolidate smaller loans and credit card debt, make necessary or just cosmetic home improvements, or pay education costs or large medical costs. Lending institutions usually will not be interested in your intended use of the funds. They will concentrate on your credit history, economic assets, and current income-to-debt ratio.

This because it may be acquired while the homeowner is still paying the primary mortgage. Home equity is based on the appraised market value of the home minus the amount of principle, if any, still owed on any existing mortgages. A percentage of this remaining value, or equity, is the amount of the new loan. Sometimes that percentage is more than 100% of the home. In bankruptcy or default terms, a primary or first mortgage is the default first lien against real property, while the second mortgage is a second lien.

Recent tax laws have inadvertently helped the popularity of home equity loans. Interest payments on such "luxury" loans as auto loans, boat loans, and other personal loans are not tax deductible. Real estate loan interest is tax deductible. Therefore, if one obtains a home equity loan to purchase a car or boat, that interest is then tax deductible.

Home equity loans come as lines of credit or fixed rate loans. They range from five to fifteen years in length. Interest rates are higher than first mortgages, but lower than credit cards. Lines of credit have variable rates and funds are drawn and repaid much like credit cards. The main difference from a credit card account is that the home equity line of credit has a fixed term and must be paid in full at the end of the term. This could result in a very large final payment. The fixed rate loan is taken all at once and may also have a large final or balloon payment, but the amount is determined at the beginning of the loan.

There are many uses for a home equity loan. One may consolidate smaller loans and credit card debt, make necessary or just cosmetic home improvements, or pay education costs or large medical costs. Lending institutions usually will not be interested in your intended use of the funds. They will concentrate on your credit history, economic assets, and current income-to-debt ratio.