Exchange Currency

home equity

The current market value of a home minus the outstanding mortgage balance. Home equity is essentially the amount of ownership that has been built up by the holder of the mortgage through payments and appreciation. Typically, residential property is bought through a mortgage, which is then paid off over a number of years, often 15 or 30. After the mortgage has been fully repaid, the property then belongs to the mortgagor, namely the buyer. In the interim, however, the buyer simply builds up equity in the home. This is what a home equity loan borrows against. Although that equity cannot be sold, banks will lend money against it. Home equity loans offer significant tax savings due to the fact that the interest paid on a home equity loan is tax-deductible. Home equity loans are often used to consolidate other debt with high interest rates (like credit card debt), to finance large expenses (such as college or a wedding), or to purchase other costly items. There are two main types of home equity loans. The first type is the traditional home equity loan, also known as the second mortgage, which lends out a lump sum of money that must be repaid over a fixed period. The second type is the home equity line of credit, which provides the borrower with a checkbook or a credit card that is used to borrow funds against the home equity. Funds borrowed from a traditional home equity loan start accruing interest immediately after the lump sum is disbursed; funds borrowed from a home equity line of credit do not begin accruing interest until a purchase is made against the equity.

Related information about home equity:
  1. Home equity - Wikipedia, the free encyclopedia
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  2. Home Equity Loan Rates, News and Advice from Bankrate.com
    Searching for home equity rates or advice? Bankrate.com offers timely news, opinion and advice on home equity loans and 2nd mortgages.
     
  3. Home Equity Loans & Lines of Credit | Wells Fargo
    Put your home's equity to work. Wells Fargo offers low-rate home equity loans and home equity lines of credit. Apply online today!
     
  4. What is home equity? definition and meaning
    Definition of home equity: The current market value of a home minus the outstanding mortgage balance. Home equity is essentially the amount of ownership that ...
     
  5. Home Equity Lines of Credit - Consumer Financial Protection Bureau
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  6. Home Equity Credit Lines
    At the same time, home equity lines of credit require you to use your home as collateral for the loan. This may put your home at risk if you are late or cannot make ...
     
  7. Home Equity Scams: Borrowers Beware!
    Homeowners-particularly elderly, minority and those with low incomes or poor credit-should be careful when borrowing money based on their home equity. Why ...
     
  8. CHASE Home Equity Loans and Lines of Credit
    Remodel. Repair. Increase your home's value. The right home equity loan or line of credit makes it possible. Chase loans let you take advantage of the equity in ...