Tips for Applying For a Home Equity Loan

By Petra Amelia on September 11th, 2007

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There are two types of loan home equity loan and home equity line of credit. And ir is very important to know the difference according to your need. In home equity the loan amount is paid in one lump sum. Normally it carries a fixed interest rate and term. One the other hand, the home equity line of credit can be drawn whenever you need money. You have to pay the interest on the borrowed amount.

Do not pay the fee which is unavoidable, common fees that are charged on home equity loans are closing cost, escrow fees, points, recording fees and flood certification fees. Home equity line of credit contains most of these fees as well.

The loan to value (LTV) ratio is the ratio of the amount of money you borrow all the way through a home equity loan to the value of your home.

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