Home Equity Loans: Borrow Money the Secured Way

By: Meghna Arora

Looking for a loan that will give maximized benefits on pledging your home as collateral? Home equity loans are the perfect opportunity that you may be looking for. With home equity loans, you can borrow an amount that is equal to the equity in your home. Equity is the market value of your home minus the pending mortgages on your home.

can be borrowed for any purpose like home improvement, car purchase, funding college education, clearing medical bills etc.

Since home equity loans involve keeping your home as collateral, these are secured loans borrowed for a longer term of repayment. On the basis of how the money is wished to be withdrawn, as a lump sum or in parts as and when the need arises, there are two categories of home equity loans.

The first category is closed end home equity loans which involve the borrowing of money as a lump sum. After this has been done, the borrower cannot borrow any further amount. The maximum amount of money that can be borrowed is determined by factors like credit history, income, and the appraised value of the collateral, among others.

The other category is open end home equity loans. This option is more of a line of credit and is thus called home equity line of credit or HELOC. It involves borrowing money in parts according to the need of the borrower. This borrowing of money extends to a certain amount and time period that has been initially fixed by the lender. This HELOC is more than just a one time loan and can be highly beneficial to the borrower.

Online search for home equity loans can reap more than usual benefits. A low rate of interest can be obtained by thorough research and comparison of quotes. Also the process of approval is speeded up due to online application.

Home equity loans can prove to the best way of borrowing money if you are opting for the secured loans option. A higher equity will fetch more money as a loan and a lower rate of interest to fulfill your needs.

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