Home Equity Loans & Home Equity Lines of Credit

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Home equity is essentially the amount of ownership that has been built up by the holder of the mortgage through payments and appreciation. Home equity loans offer significant tax savings as compared to personal loans 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 (such as credit card debt), to finance large expenses (such as college education or a wedding), or to purchase other costly items (such as home improvements or additions).

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.

* Please consult your accountant or tax advisor for your specific tax situation, as FinanSecure, LLC is not a tax advisor and does not claim to provide you with any tax related services other than explaining the benefits and tax implications that your mortgage may have.