About Home Equity Loans

Video Transcript

"Hi this is Matt McKillen with Innovative Financial Group. The question posed to me today is what is a home equity loan? Well there's generally two types of home equity loans available. One is just a traditional second mortgage on your property which can be a fixed rate and it's a principal and interest loan that generally has a term of no longer then 15 years and you're on a set term of repayment with a payment every month and you have to borrow all the money upfront on day one. The second type of home equity loan is what's called an equity line of credit. That's a variable rate loan which gives you an open end account on your home, similar to a credit card where if you do not borrow the money off your home equity loan, you're not expected obviously to pay interest on it. There is no set term of repayment, usually what happens is you can take draws on the line for up to 10 years and then after 10 years they put you on a fixed term of repayment which can be basically another 5 years or 10 years to pay the loan off. Again, the two types of home equity loans are fixed rate second mortgages and more popular is the home equity line of credit. My name is Matt McKillen and I'm with Innovative Financial Group."