Home equity loans are given in exchange for interest in your home. The loan is easy to get since you are putting up the part of the house you own as collateral. If you are diligent in your search you can come away with a great interest rate on a home equity loan. Sure, most are offered with less than desirable interest rate but if you shop around you can find them with a rate more to your liking.

You can choose an equity loan with fixed or variable rates. Now they are even coming in hybrid fashion. A hybrid is a loan that incorporates both the fixed and variable formulas. Variable rates are generally a lot smaller because the lender experiences greater protection.

The lender has the upper hand because as the market trends fluctuate, so does the interest rates. If you an equity loan with 7.5% interest and the prime lending rate jumps to 8.5% during the course of the loan so does the rate on your loan. On the bright side if, and it’s a big if, they go down so will your interest rate. This could mean lower monthly payments for you.

The hybrid usually starts with a variable rate and tapers off into a fixed rate after a few years. The plus to having a home equity loan that is a hybrid id the chance you might get lucky and the rates shift in your favor the disadvantage is if it goes the other direction you may not be able to meet the payment schedule. These are just a few of the things you have to take into consideration when getting a home equity loan.

Lenders will negotiate sometimes and really it doesn’t hate to give it a try. The fact that you have collateral will help you in this instance. They see it as a very safe investment. How could they not when they have everything to gain? If for some reason you fall behind in payments they get to keep all the money that you have paid in and can put a lien on the property.

Home equity loans are given out at 80% of the total amount of equity you have in the house. If you had a home with a mortgage of 200,000 and you have paid in 85,000 you can request a loan for as much as 68,000 with a reasonable hope of actually getting it. A second mortgage as the home equity loan is often referred to as can keep you in debt for years past the original mortgage payout.

If you do the math you will find that the home equity loan added to the total purchase price of the house which may or may not be recovered in appreciated value. The housing market is fickle and if there is a slump your home that originally would have cost you 200,000, but actually cost that and a half could only be valued at 150,000. If this does happen you have will have lost a great deal in the bargain. For more things you should know about home equity loans go online today.

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