Question:

How will I pay off home equity loan?

Answer:

Before you tap your equity, you have to think how you will pay off the home equity loan. There are payment plans which allow minimum payments, covering portion of the due interest but the interest that remains unpaid will be added to the Home Equity Loan (HEL) amount.

Or, there are payment options with which you only pay due interest. When the HEL payment plan ends, you will still owe what initially was borrowed.

For example, if you borrow $12,000 for 5 years you may end up owing $12,000 and more if you never repay any principal during these 5 years of the loan.

Home equity loans use your house as collateral.

Remember that with first and second mortgages, home equity loans and lines of credit your house is used as collateral for the loan. That is, when the payment plan is over you will need to either make a balloon payment, refinance or somehow satisfy the debt or your house may be taken by the bank.

Recommended helpful present and future homeowners links:
Why: Refinance to a fixed rate loan while mortgage rates are still low.
Link:
Why: Because FHA loans are insured by the US Federal Government they have very competitive interest rates and are easier to qualify.
Link:
Why: Know and protect your credit report and score.
Link: See All 3 National Credit Scores & 3 Reports Instantly, Online & Free
Why: Find your next home and save money.
Link: Search thousands of foreclosures. Free 7-day trial.
Link this QnA Print del.icio.us Digg
Was this Mortgage QnA helpful?
Not at all
  • Currently 3.1/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
 Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA:

Common misspellings: mortage and morgage