Home Equity Loans

A home equity loan (HEL) is essentially a second mortgage that people opt to take out if they need the extra money to pay off bills or make extra purchases. When an individual takes out a home equity loan, he or she uses the equity of the house to act as collateral to back a secured loan. In general, up to $100,000 can be borrowed against the value of the home.

Collateral and Equity

In order to understand home equity loans and select an option that is most beneficial to you, it is important to familiarize yourself with the terms “equity” and “collateral.” Collateral is a term used to describe the property that one uses to back a debt. If the debt is not paid off on time, then the creditor can collect the collateral until the money is paid back in full. Equity is a term used to describe the difference between how much money a home is worth and how much of the mortgage is still owed. Thus, an individual may take out a home equity loan even if he or she has not paid off the house in full.

Why should I take out a home equity loan?

Home equity loans allow individuals and families to take out secured loans and use the money to make large purchases or pay off debts. These loans are provided with very low interest rates compared to credit card rates and they are readily available to homeowners. For these reasons, many homeowners turn to HEL’s when they need to spend large amounts of cash on a service or good.

Contact Us

If you would like to learn more about home equity loans and how they may be beneficial for you, contact the Austin bankruptcy lawyers of Slater, Kennon & Jameson, LLP today at 512-338-1100 to speak with a qualified attorney about your concerns.