What Are Home Equity Loans?
A home equity loan is a loan that you can take out against the equity in your home. Of course, to understand a home equity loan, you first need to understand what is meant by home equity. The term equity refers to the difference between the amount your home is worth and its appraised value. If the home is worth more than the amount owed you have that much equity. This is usually the case. If you owe more than the home is worth, however, you have negative equity this is not a position you want to be in. Home equity loans are made for an amount that is somewhat less than the amount of equity. In most cases you can borrow up to 80% of the equity in your home if you’re trying to borrow $25,000 or more. Usually if you want an amount less than $25,000 and have at least $25,000 in equity you can get the entire home equity loan approved.
