1. What is home equity?
Answer — Home equity is the system that allows you to get a second time loan from the same lender who has given you loan on your home.
2. How does that work?
Answer — As in any other secured loan, you keep buying back your home from the lender within a time-frame (Else you lose it). But if the value of your home goes up you can get further loan from the lender. The amount that remains between the paid value and the risen value is what determines your new loan.
3. How much can I get from HEL?
Answer — From 75% to 125% of your equity, depending on your bank’s policy.
3. Is there the line of credit option?
Answer — There is. You repay and re-borrow without applying if you choose this option. However, the amount cannot be as big as equity.
4. How much can I borrow from a bank as home equity?
Answer - That depends on things like your credit score, your home appraisal etc.
5. Home equity seems alluring. Is it safe?
Answer — All loans are risky if you are not calculative and cautious. You should be more cautious as your home, which is your shelter, is what you are putting at stake for money.