Home Equity Loans

A Home Equity Loan is secured against the equity using the home as collateral. The costs of obtaining the loan involve application fees, points and closing costs. Also referred to as a second mortgage, it can either be a standard Home Equity Loan or a Home Equity Line of Credit. In the former, a lump sum payment is made whereas, in the latter sums can be borrowed in installments up to the loan amount.

Certain factors that can contribute to building equity faster are higher initial down payments, extra principal payments, shorter mortgage terms, the right home improvements, and increase in property prices. It should, however, be noted that default in payment can lead to losing the collateral used to secure the loan.