Home Equity Loans
Home equity loans are just as versatile as personal loans. Borrowers can use them for just about anything. The amount of money that a borrower can take out depends on the equity in their home, which is the house’s worth minus the balance left on the mortgage. Depending on those values, a home equity loan may offer higher dollar amounts than personal loans.
- Loan lengths: 5 to 30 years
- APRs: 4% to 8%
- Credit score required: 680
- Collateral: borrower’s house
- Consequence for not paying: possible foreclosure
Home equity loans are similar to another product called home equity lines of credit (HELOC). Both are secured by your house. The difference is that a HELCO functions like a credit card, in that you can borrow up to a certain amount of money at any time, but aren’t obligated to borrow.