In the previous article we’ve already discussed a question, related to the home equity loans. We’ve cleared out what is home equity and how it can be used for taking new loans for your needs. In this article we’d like to tell more about the types of home equity loans and their specifications.
There are just two different types of the equity loans. The first one is called simply ‘a loan’, due to its singleness. A person, whose house’s price has increased, is able to get a single loan for his needs. Another type of the loan is called ‘a line of credit’. In general, it works similarly to the single loan, but it has the only difference – it’s not the single payment, but rather a credit line, which may be withdrawn when the borrower needs. In its core the equity credit line is similar to the credit card, when you can withdraw the money when you need, repaying it back.
The average time of the equity loans to be repaid is 15-20 years. However, there either 5-years long loans, or 30-years long equity loans. It depends on the amount of money the borrower takes. The difference is also in the cost of the home.
Comparing these two types of the home equity loans, we can say, that the credit line seems to be more convenient, than the single-payment loan. The borrower is able to repay it and take money again, if he needs. It provides financial flexibility.