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Chapter 1: What equity debt is

Home equity loans are an increasingly popular way to raise cash. Find out what the risks and rewards are.

Your home is your castle -- and sometimes it's also your bank. The equity in your home -- the current appraised value minus the amount owed on the house -- can be tapped through loans at lower interest rates than credit cards. This chapter defines the types of home equity debt and the pitfalls of each. We also look at the tax advantage and low interest rates that make them such a popular option for borrowing.

What you can expect to learn from this chapter:
  • What home equity debt is
    The two types of home equity debt -- home equity line of credit, or HELOC, and home equity loan -- are explained.
  • Why they are popular
    Their low interest rates and tax deductibility make these loans attractive. Plus, links to Bankrate's calculators to find the best rates.

 

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HOME EQUITY STRATEGIES & ADVICE NEWSLETTER

Advice for homeowners looking for options to use their home’s equity wisely. Delivered monthly.

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Ask Dr. Don

Tap HELOC to cover college costs?

Dear Dr. Don, I have a home equity line of credit, or HELOC, for $110,000 that expires in September 2016. I do not have a mortgage. I won't need to use the home equity line until 2015 when my children head to college. I'd... Read more

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