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What are the different types of home equity loans?

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11th Dec 2009 by Tom Lindmark

Home equity loans generally breakdown into two types. Those that have a fixed rate and those with an adjustable rate. Fixed rate home equity loans usually require you to borrow the entire amount of the loan upfront and repay it on a set schedule over a given period. Adjustable rate home equity loans, sometimes called home equity lines of credit, usually allow you to borrow less than the full amount and repay it monthly at a minimum amount or more if you so choose. These types of loans allow you to continue to borrow and repay under the line of credit until the maturity date of the line of credit. At that point in time the bank may choose to renew the line of credit or they might not at which point you will be required to make a certain monthly payment based on the amount of the loan outstanding at that point in time.

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11th Dec 2009 by JonB

There are 2 major kinds of home loans. Fixed rate, adjustable, and negative amortization. A fixed rate is simply a loan that has a fixed interest rate no matter what happens with you or the markets. An adjustable rate loan usually is fixed for a small amount of time, then the interest rate begins to adjust. How often and how high it can go differ and usually are mentioned in the name of the loan in the interest of full disclosure. A neg am loan means that the borrower has the option to pay a partial payment with no negative impact to their credit. However, since the partial payment doesn't even cover the monthly interest, that amount is added back into what you ow on the loan.

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9th Dec 2009 In Finance 2 Answers | 2781 Views
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