Remodeling – Payment Options
Know Your Payment Options When Remodeling
What Are the Different Types of Equity Loans?
There are two common types of home equity loan, each with its own unique characteristics and benefits, depending on your needs and situation.
- Traditional or Second Mortgage
In this loan situation you receive a single lump sum of money, which is paid back over a fixed period of time. Interest begins accruing immediately after you receive the funds.
- Line of Credit
A home equity line of credit, is very different from the second mortgage. In this type of loan agreement, your lender provides you with a 'credit card' or checkbook, to use if and when you need or decide to use it. No interest accrues until you actually make a purchase.
Sounds straight-forward enough. But, homeowner beware! The lending industry is highly competitive and it could be a costly mistake to start the process of loan shopping without knowing What Are the Pitfalls of Equity Loans?