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Home equity loan terms exist when one borrows cash against the equity in their home and repay it over a fixed term. It is customary to pay fees and closing costs upfront and choose between a fixed or variable interest rate. However, this is not as simple as a task as it sounds.
Home equity loans exist to make consumers pay more then what they should in the long run. The many banks who approve them also will not hesitate to foreclose your home if payments are not met on time. With a home equity loan your house serves as collateral and banks simply do not care if you lose your home despite what they say. They are in business to make as much money as humanly possible.
There are many methods used which seem beneficial but really aren’t. One method is known as the balloon payment. This is when a loan or mortgage is provided for smaller payments which lead into a massive payment to be made at maturity. This sounds nice because consumers think it gives them time to save money but often many still do not have the money when that one big payment arises.
|Jennifer Mathes, Ph.D.|