What are the pros and cons of home equity loans

alot of cons no pros pay on interest not principle

home equity loan is giving you credit to purchase a house. you can payback the mortgage amount as an EMI months after months.

Home equity loans typically have a higher rate, is often a fixed rate AND you are borrowing ALL of the loan amount the moment you sign the papers at closing. So, if your home equity loan is for $25,000 at 8%, then your payments will be calculated against that $25k immediately.

A home equity line of credit ( HELOC ) typically has a lower rate that is usually adjustable. In the example above, with a HELOC you do NOT have to use all of that $25k right after closing. You can draw from it as needed and you only pay interest on the amount you draw.

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In this home equity loan the property is used as colateral. In most of the times you have 1st loan and the difference between 1st mortgage and house value can be borrowed with a home equity loan.

Benefits of home equity loan-

1) Interest lower than credit card rates.
2) Tax deductibility.

Disadvantages of home equity loan is if you fail to make payments on a HEL or HELOC may cause you to lose your home.