Understanding home equity loans can be a bit confusing. Fear not my friend, we have put together an easy infographic that covers the basics.
But what exactly is a home equity loan? Basically, you can borrow a lump sum of money which is secured by your house. That’s why they’re commonly know as second mortgages. Because you’re backing up the loan with your house, lenders assume less risks and are able to provide you with lower interest rates. Additionally, the interest rate and monthly payment usually remain consistent throughout the term of the loan, which means: saving yourself some money!
Generally, people use home equity loans to finance major expenses and milestones in their lives. Such as: sending your kid to college, starting a home renovation or consolidating high interest debt (think credit cards). This infographic covers the basics of home equity loans to get you on your way to make the best possible decision regarding your personal finance.