What is a secured home equity loan?
Answers:
A secured home equity loan is money that is loaned to you using the equity or value of your home after all mortgages and other liens against it are paid. If you have a home appraised at 100K and 1st mortgage is 80K. then you have 20K equity in your home. A secured loan is usually in the form of a 2nd mortgage. so if you were to sell your home. the mortgages would be paid first. 1st mortgages, then 2nd etc.
The secured home equity loans allow you to borrow a large amount of money based on the equity in your home. It is called secure, because the amount you will borrow is secured through your property- your home. Your home will serve as the collateral, resulting to the confidence of lenders like lending tree to let you borrow for a very large amount of money. This reasons made me remember what I have read something about secured home equity loans and it says that if you are to think about it more deeply, it would seem that lenders are more interested in homeowners’ house property than the homeowners’ ability to repay the loan. And it made sense, because wherever and however you see it, your home is at risk and to add up, the current market value of home is continuously rising. You could lose your home through secured home equity loans, if you fail to pay.
this mean they loan you money on the value of your home your house then becomes the protery of the lender until the loan is pay off
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loan borrowed against your home's remaining equity (the difference between your first mortgage and market value of your home). This is a second mortgage.
A loan based on the amount of equity a homeowner has in the property. The interest paid on a home equity loan is usually deductible. Unlike a home equity line of credit (HELOC), the home equity loan features a fixed rate, payment and term, usually five to 15 years.
If you don't repay the debt, the lender can take your collateral and sell it to get its money back. With a home equity loan or line of credit, you pledge your home as collateral. You can lose the home and be forced to move out if you don't repay the debt.
There are two types of home equity debt: home equity loans and home equity lines of credit, also known as HELOCs. Both are sometimes referred to as second mortgages, because they are secured by your property, just like the original, or primary, mortgage.
Home equity loans and lines of credit usually are repaid in a shorter period than first mortgages. Most commonly, mortgages are set up to be repaid over 30 years. Equity loans and lines of credit often have a repayment period of 15 years, although it might be as short as five and as long as 30 years
A home equity line of credit, or HELOC, works more like a credit card because it has a revolving balance. A HELOC allows you to borrow up to a certain amount for the life of the loan -- a time limit set by the lender. During that time, you can withdraw money as you need it. As you pay off the principal, you can use the credit again, like a credit card.
A HELOC gives you more flexibility than a fixed-rate home equity loan. It also is possible to remain in debt with a home equity loan, paying only interest and not paying down principal.
A line of credit has a variable interest rate that fluctuates over the life of the loan. Payments vary depending on the interest rate, the amount owed and whether the credit line is in the draw period or the repayment period.
During the equity line's draw period, you can borrow against it and the minimum monthly payments cover only the interest, although you can elect to pay principal.
During the repayment period, you can't add new debt and must repay the balance over the remaining life of the loan.
The draw period often is five or 10 years, and the repayment period typically is 10 or 15 years. Those are generalizations, and each lender can set its own draw and repayment periods. Lenders have been known to have draw periods of nine years, six months, and repayment periods of 20 years
With either a home equity loan or a line of credit, you have to pay off the balance when you sell the house
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