A Closed-End home equity loan is very much the same as a traditional mortgage in that monies are loaned to the borrower, who is in turn obligated to pay a monthly payment each month … very much like a 2nd mortgage. This type of loan typically takes 30 years to pay off (when combined with 1st mortgage)

On the other hand, a home equity line of credit is very similar to auto loan or credit card. These lines of credit most often allow the borrower to utilize the amount of a credit line in small or large amounts, not to exceed your total credit limit. A home equity credit line usually is structured to be paid off within ten to twenty years.  Here are some FAQs

What to consider when comparing home equity loans: Lender’s Name; Loan Amount; Complete Interest Rate Info; Initial Interest Rate, Is there an annual cap on the interest rate?; Complete payment information and monthly payments required each month; Any and all Fees?; Points?; Title Search; The property’s appraisal; Balloon Payment? It is wise to sit down with a mortgage specialist at your bank to learn as much as possible before deciding. Usually educated, credit score conscious consumers increase the strength of their credit profile. Become more educated.

A helpful equation: Appraisal Value minus ( – ) Mortgage Balance = Home Equity. So if a property is appraised at $200,000 and the balance on the mortgage is $130,000; the Home Equity = $70,000.

Try our home equity loan calculator.