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A home equity loan (sometimes abbreviated *HEL*) is a type of loan in which the borrower uses the equity in their home as collateral.
These loans are sometimes useful to help finance major home repairs, medical
bills or college education. A home equity loan creates a lien against the borrower's house, and reduces actual home
deed), although they can be held in first or, less commonly, third position.
Most home equity loans require good to excellent credit history, and reasonable loan-to-value and
combined loan-to-value ratios. Home equity loans come in two types, +closed
end+ and open end.
of the property, just like a traditional mortgage. Home equity loans and lines
of credit are usually, but not always, for a shorter term than first mortgages.
In the United States, it is sometimes possible to deduct home equity loan
interest on one's personal income taxes.
Line of Credit (HELOC). A HELOC is a line
of revolving credit with an adjustable interest rate whereas a home equity loan
is a one time lump-sum loan, often with a fixed interest rate.
recourse and nonrecourse loan, secured and unsecured debt, and dischargeable and
US home equity loan may be a recourse loan for which the borrower is personally
liable. This distinction becomes important in foreclosure since the borrower may
remain personally liable for a recourse debt on a foreclosed property.
collateral — in the event that the borrower defaults, the creditor takes
possession of the asset used as collateral and may sell it to satisfy the debt
by regaining the amount originally lent to t^ Credit
card debt is an unsecured debt such that no asset has been pledged as collateral
for the loan. Using a home equity loan to pay off credit card debt essentially
converts an unsecured debt to a secured debt.
debt is dischargeable in bankruptcy. For instance, US student loans are
"practically non-dischargeable in ba^
Secured means that there is some collateral to cover the balance of the loan - e.g. if you take a home mortgage that is secured by the house - it is a secured loan. On the other hand - revolving debt like credit cards are usually unsecured - although you can secure them (place $500 into a savings account - then use that account to secure the credit card). Hope that helps. Your student loans and credit cards should be unsecured - as the lender cannot really take the education out of your head (student loan) or the meal you charged to your credit card last year. Most debt elimination or counseling services only deal with unsecured debt - the reason is that secured debt has a UCC first lien poistion and most lenders will not negotiate that position.
We list several debt consolidation and credit improvement resources and information on our website - not cost to use the site. This is a big problem in this country and we have done some research to ensure the companies we list are legitimate and actually do what they say.
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thanks so much for your help. i appreciate you responding to my question. i guess i'll just have to decide what will be best for me
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right now i have about $15,000 worth of student debt and about $10,000 worth of credit card debt and my credit score is poor. i've looked into debt settlement at this website; www.debtreliefusa.org...that's given me a whole new insight on how to eliminate debt but at this point i need a loan...so, what is the difference between the two loans and which would be the best for my situation? if i get in anymore debt i am done for. please give me some suggestions.