Perhaps you are considering tapping into your home equity to renovate your kitchen, or take care of the balance on a credit card. A home equity loan is a fixed rate or adjustable-rate loan that uses your home equity as collateral. You will repay this loan over an agreed time period by making monthly payments, just like your original mortgage. A home equity loan also can be called a second mortgage.
The steps toward a home equity loan are similar to getting your original mortgage. Your closing costs (usually two to three percent of the loan amount) are generally smaller and, even though your rate of interest is bigger on a home equity loan, the interest paid can be tax deductible.
You'll have to provide proof of your salary and have good credit to qualify for a second mortgage. To figure out your home's current value, your lender will ask for a home appraisal. To discuss your home equity options, call us at (562) 693-5048.
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