Home Equity Loans and Lines
Home equity loans or equity lines are typically 2nd mortgages and can be a fixed rate OR variable rate loan. An equity loan is a loan with a fixed interest rate over a certain amount of time, and an equity line is a loan with an adjustable rate that is calculated from prime rate. Borrowers can usually draw against equity lines similar to a revolving credit card for a specific amount of time as dictated by the bank (usually 10 yrs), then after that time has passed, the borrower is required to start paying down the balance of the loan and can no longer draw against it anymore.
Home Equity Loan: A home equity loan is similar to a fixed rate conventional loan-- your rate is fixed for the life of the loan and commonly amortized over 30 years.
Home Equity Line: A home equity line enables a homeowner to be approved for a certain amount of credit, which is often based on a maximum of 80% of the appraised value of the home.