Carlos and Teresa already had a great first mortgage from their last refinance. The rate was fixed and low so they didn't want to trade it in. But since they refinanced in 2003, the value of their home was considerably higher, and they wanted to tap some of that equity for a special project. We delivered a home equity line of credit with great terms at no cost in less than two weeks.

When you're looking for a fast, low-cost way to raise money, a home equity line of credit or home equity loan is often the best way to go.

There are many good reasons why people borrow against the value of their home:

• Like Carlos and Teresa, they may have an opportunity that requires cash but they don't want to refinance an existing first mortgage for cash out because the new terms might not be as favorable as what they already have. A home equity loan records in second position and doesn't affect an existing first mortgage.


• Some people want to have ready access to cash in case an unforeseen need or opportunity comes up. A line of credit can simply wait around with a zero balance until you need it. If a need comes up, you're not faced with applying and waiting for a loan to close. With a line of credit in place, the cash is available to you immediately.


• Some people are carrying higher interest rate debt on credit cards, student loans or auto loans. Many times it's much more efficient to consolidate that type of debt with a home equity loan. The rate is often much lower, the payments are lower and the interest on a home equity loan is usually deductible from your income taxes. So a home equity loan can eliminate wasteful spending and increase your monthly cash flow.

There are many other scenarios and uses for a home equity loan or line of credit. But the common theme is that the equity in your home is an asset that gives you the power to raise cash quickly and efficiently, often with no closing costs at all.

What’s the difference between a home equity line of credit and a home equity loan?

A home equity line of credit allows you to write checks or use a debit card to access a pre-approved loan secured by your home as you need or want the money. The required monthly payments are typically calculated as interest only, but of course you can pay the loan back down to a zero balance and start all over again. This flexibility typically lasts for 10 years, followed by payments of principal and interest until the loan is paid in full. The interest rate is variable and is usually equal to or tied to the Prime Rate.

A home equity loan, on the other hand, is a fixed rate product where you take the full loan balance in cash all at once. The monthly payments include principal and interest.

Home equity products are available from $50,000 up to $1 million, depending on your home’s value and other factors.


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