I’m in the U.S.
I’ve owned my home for 6 years and would like to do some renovations. Would someone explain to me exactly how home equity loans work?
Is that the best option for this?
Thanks!
In: 1
Very simplified version. Let’s say your house is worth $100,000. You still owe $60,000 on the mortgage.
So you have $40,000 equity, as in, assists you have, minus what you owe, give you a net value of $40,000.
Some company will loan you $40,000, putting your house up for collateral. If you don’t pay it off, they take your house.
It’s simply a form of secured loan, with your house as the security.
As long as you are confident that you can pay it back, then it’s a useful tool.
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