Obtaining a home equity loan or taking out a home equity line of credit can save you huge amounts of money! But you can't get the savings you need unless you understand the basic facts about home equity loans.
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Learn of the Facts about Mortgage Equity Loans

A home equity loan is a line of credit that you take out as a homeowner. Because a home equity loan uses a homeowner's property as collateral, a homeowner borrows any amount of money below or up to the amount of equity she has accrued on her home. If you're not acquainted with the bank jargon of home mortgages, here are some simple definitions of important business terms to help you understand how a home equity loan works. If not are not acquainted with jargon, then start over at our home page.

Equity

Equity simply means the amount of money you've already paid for your house. For example, let's say your home is worth $100,000. If you made a down payment of $10,000 and over the time you've owned your home you've made payments totaling $30,000, then the total equity of your home is valued at $40,000. This is because equity is the difference between the amount of money your home is worth and the amount of money you still owe on your mortgage.

Collateral

Collateral is a general lending term that refers to any guarantee you can provide your lending institution in the event that you foreclose on your loan. Collateral can help you get lower interest rates on loans because creditors are more confident that they will get their money back. When you take out a home equity loan, you offer your property as collateral. This means that should you foreclose on your home equity loan, your lender has the right to take your home and evict you.