Article: Home Equity Loans ? A Big Benefit Or A Big Mistake?
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Home Equity Loans ? A Big Benefit Or A Big Mistake?
When the bills are piling up and there doesn?t seem to be any way out, a home equity loan can seem like the answer to your prayers. Home equity loans can also be a great way to jumpstart a business or investment portfolio. However it?s important to realise that in some circumstances, a home equity loan may in fact make your life a whole lot worse.
A home equity loan is like a second mortgage on your home. If your home is currently worth $130,000, and you have a mortgage against it for $70,000, then you have $60,000 of equity available. Some home equity loans may allow you to borrow up to 80% of your home?s value, others may go higher in special circumstances. In this example, you would be able to borrow another $34,000 as a home equity loan and still have only borrowed 80%.<...
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