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Typical Home Owner Loans Advatages

Written By: admin - Feb• 13•13

Home Owner Loans

When you’re a homeowner, you have several advantages when it comes to getting loans. This is typically because when you own a home, after paying down your mortgage for a while, you generate equity. Equity is simply the difference between what you owe on your house, and what it is worth.

The main thing that you should know about equity is that it can be borrowed against. And it can be borrowed against at fairly low rates, compared to other types of loans. This is because an home equity loan, or HELOC, as they’re frequently called utilize the equity in your home while using your home as a collateral for the loan, hence the lower interest rate.

What’s a HELOC?

HELOC stands for “home equity line of credit.” If you had $20,000 in equity in your home, you could apply for such a loan. Your line of credit would be somewhere between a few thousand and $20,000, and you’d likely have a fixed interest rate on the loan. Many people use these types of lines of credit to spruce up their homes, consolidate bills, buy automobiles, or basically any other type of larger purchase you can think of.

A huge advantage to having such a line of credit is that any interest that you pay on the line of credit may be tax deductible, since it is like a second mortgage. So, even if you don’t get the lowest interest rate, you may get to write that interest off at the end of the year, thus lowering your overall tax burden.

If you’re a home owner and looking for some cash, it may be in your best interest to check out what these types of loans have in store for you.

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