Home equity loan

Home equity loans: -

Closed End Home equity loans:- In this loan you receive a lump sum loan amount for your equity in your home. It is called closed-end because its only one time loan, once you get the money, you cannot borrow further from the loan. You can borrow up to 100% of the assessed value of your home, less any liens. These fixed rate loans can be amortized up to 15 years with a 3, 5, or 7-year balloon payment. When the balloon balance is due, you can pay off the balance or refinance

Open End Home equity loans : - This is a revolving credit loan where borrower can choose when and how often to borrow against the equity in your home. You can borrow up to 100% of the assessed value of your home, less any liens. These lines of credit are available up to 25 years at a competitive variable rate. Your minimum monthly payment is 1% of your balance.

Both are usually referred to as second mortgages, because they're secured by your property, just like your original (first) mortgage. Home equity loans and lines of credit are usually for a shorter term than first mortgages. It is useful if one needs financing for home improvements, school tuition, loan consolidation, or any other reason. Home Equity Loans have a possible tax benefit.