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Consolidate Your Debts With Home Equity Loans
By Susan Chen
Your home is your biggest asset. It does not just provide you shelter; it also comes to your aid when
you are in financial distress. The equity of your home, built over the years, can be used to obtain loans
by acting as the collateral. You can find two types of home equity debt, namely in the form of home
equity loans and also in the form of home equity lines of credit otherwise known as HELOCs. Both of
them are described as second mortgages, because just like the primary mortgage, the equity loan is
also secured by your property. But unlike the first mortgage, the equity debt is repaid over a shorter
span of time. The first mortgage is usually repaid over a span of 30 years, whereas the equity loan is
usually paid within fifteen years. However, there are exceptions and the repayment period may be as
short as 5 years and as long as 30 years.
The growing popularity of home equity loan generally coincides with the recent surge in property value
and relatively lower rate of interest. Thus more and more homeowners are turning to home equity
loans for managing their personal debts. Other advantages of the home equity loan also include lower
interest rate and tax deductions, making this mode of debt even more popular.
So far as the equity rate of interest is concerned, it is slightly higher than the first mortgage, but
considerably lower than credit card loans or other consumer loan interests. Because your property is
used as the collateral in equity loans,