Cost Of: Home equity loan savings
A fixed rate could save you thousands of dollars in interest.
If you are looking for a way to pay down debt or need money for a big renovation, some homeowners turn to home equity loans.
As Investopedia editor-in-chief Caleb Silver explains, this allows consumers to tap into the equity of your home. Silver says, "This is basically taking a loan out on the amount that you actually accrued in the equity in your home by making those payments over time and this is a fixed payment, at fixed interest rates, which is useful because you know how much you are going to have to pay back over time and the money comes to you in a lump sum."
A fixed rate could save you thousands of dollars in interest. Investopedia experts tell News 12 that you can usually borrow up to 75% or 85% of your home's appraisal value. So, if your home has gone up in value, you can access quite a bit of credit.
Silver says you need to keep this in mind, "You have to have really good credit to be able to do this." You also must have been consistent with your monthly mortgage payments.
He also points out that the loan is essentially secured by your home, so that is the collateral you got to pay it back because you put your home on the line.
