Home Equity Loans - Ohio Mortgage Broker

Home Equity Loans at Cleveland Ohio Mortgage

Definition – Home equity loans are home loans based on the equity available in your home. They act like bank accounts. It is also known as a home equity line of credit or a a HELOC. You can have a HELOC for $30,000 and only use $10,000 of it. You will only pay interest on what you use. The rest of the loan will be available to you at your discretion. The rates are usually variable, but many lenders now offer “lock rates” that will allow you to lock your HELOC in at a fixed rate for the remainder of the term.

Advantages - HELOCs can be a great source of quick short term cash. One good example would be using your home equity loan for a down payment on a new property. You can then sell your old property and pay off the home equity line of credit you used for the downpayment on the new home. Another advantage to a HELOC is if you needed to pay off higher interest debt. By taking a HELOC, you will have a higher interest rate than refinancing in most cases, but you will save good money on closing costs since the closing costs for a home equity line of credit are minimal.

Disadvantages - The rates in most cases are variable interest rates and due to their higher risk, rates tend to be a higher than if one would take money out of their home by doing a cash out refinance.