A home equity loan is money borrowed against the value of your home beyond the amount you owe on it. Home equity loans are sometimes preferable to other forms of credit because they commonly have lower interest rates than credit cards or other unsecured bank loans, and this interest may possibly be deducted from your taxes. Qualifying for a home equity loan is similar to the process one goes through to get a mortgage. An appraisal may be done on your home to determine its market value. The amount you still owe on your home will be deducted from the market value to determine your equity. How much you can borrow for a home equity loan will be determined by how much equity you have in your home. Failure to re-pay a home equity loan, or consistently making late payments can result in the repossession of your house by the lender. For more information on home equity loans, please contact your bank or financial advisor.
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