What is a Home Equity Loan?
Many lenders now offer home equity lines of credit, more commonly know as HELOC's. You may qualify for a significant loan size depending upon how much equity you have in your home as well as real estate trends in your area. HELOC's are revolving, much like a credit card. You can pull money out of your home's equity and pay it back as you wish, then use it again.
One disadvantage of a HELOC is that you pay a higher interest rate typically than your first mortgage, but it may be offset by the tax advantages. HELOC's. It's also important to note that HELOC's tend to be tied to the Prime Rate and are variable, so the rate will go up or down with the Federal Reserve. Variable-rate plans secured by a dwelling must, by law, have a ceiling on how much your interest rate may increase over the life of the plan. Some variable-rate plans limit how much your payment may increase and how low your interest rate may fall if interest rates drop
