Equity is the difference between your home's value and the balance on your mortgage loan. If your home is worth $100,000 and you owe $75,000 on the mortgage, then you have $25,000 of equity in your home. Borrowing against this equity is currently a very popular method of getting a big chunk of credit, primarily because of low interest rates. Add to that the fact that the interest on most home equity loans is tax deductible and they become an appealing option if you need to make a major purchase. Home equity loans are typically used for consolidating consumer debt or covering a large expense such as a big wedding, college tuition, or home renovations. However, because your home is collateral for the loan, you should be very careful about using home equity loans. The problem is that if you default on the loan, the bank will foreclose on your home. Types of Home Equity Loans There are two types of home equity loans. A traditional home equity loan is also called a second mortgage and i
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