Shopping Home Equity Loan Rates
By Jennifer Hershey, Thu Dec 8th

If you have been in your home for a number of years and youhave established some equity, you may be considering liquidatingsome of that equity. A great way to do this would be to go witha Home Equity Loan.

A home equity loan allows for you to borrow off of the equityyou have established in your home through appreciation andmonthly mortgage payments without having to touch your firstmortgage.

This is why a home equity loan can also be known as a secondmortgage. But before you go and start signing applications, shoparound so you can find the best home equity loan rate out there.

There are two types of home equity on the market that youhave to choose from. The first one is your standard home equityloan with a fixed rate, which of course, is based on prime. Thisloan you receive in a lump sum and begin to make monthlypayments upon it immediately.

The second type of loan is the home equity credit line. Thisone, as its name implies comes in the form of a line of credit.The home equity line of credit has a rate that is variable,which means it will fluctuate with the prime rate. Many of themcome with introductory rates for the first five or six months.

Once approved for a home equity line of credit, you will notreceive it in the form of a lump sum. Instead you will receiveit in the form of a check book giving you easy access to drawupon it in the amount you would like at your convenience. Onceyou do draw upon it, you will have to begin paying it back on amonthly basis. Normally in the form of interest only for thefirst ten years.

Suppose you were to receive a home equity line of credit in theamount of $25,000.00. If you only wanted to borrow $6000.00,than all you would have to do is write out one of the check'sthe lender sent you and deposit it into your checking account.Your payment would than be based on the $6000.00 you borrowedfrom your line.

Keep in mind, home equity credit lines do come with

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a rate thatis variable, and that rate is based on prime. So, if the primerate goes up, the rate on your home equity credit line will goup as well.

On the other hand, if the prime rate goes down, than the rate onyour home equity credit line will go down.

Mortgage companies are very competitive, so whichever homeequity loan you decide to go with, it would be in your bestinterest to shop around so that you may compare rates.

After allowing for a few loan officers to assess your situationand offer you a rate and product, base your decision on the rateand product that best fits your needs and budget.

About the author:Jennifer Hershey has more than twenty years of experience in theMortgage Industry as a loan officer. She is the owner ofhttp://www.explainingmortgages.com/, a mortgage resource sitedevoted to making mortgage terms and products easy tounderstand.