The equity in your home may not be something you think of often, but it can be a valuable lending tool. The equity you have built up is the difference between your property's value and what you have left on your mortgage. If you have been making mortgage payments for a while or live in an area with rising home prices, you may be surprised by how much equity is present. Home equity loans allow you to take advantage of this resource, but there are a few things to know before taking one out. 

What They Can Be Used For

The first thing to know about home equity loans is that they are very flexible. Home equity loans are used for various purposes, including home improvement projects, debt consolidation, education expenses, and medical bills. Similar to credit cards and personal loans, home equity loans can be used for anything. However, they tend to come with lower interest rates than these other borrowing options. So if you have a significant expense that you need to borrow money for, a home equity loan can be an affordable lending option.

Loan Terms Vary

Another thing to consider before taking out a home equity bank loan is the loan terms. Your loan terms will vary depending on how much equity you have in your home, your finances, and the loan's length. Most home equity loan terms range from five to 30 years. Your interest rate will depend on the details of your loan and financial factors like your income and credit score. How much you can borrow using this type of loan will also vary, but most lenders allow you to borrow up to 80 or 90 percent of your available home equity.  

There Are Fees

Like many other types of loans, home equity loans come with their fair share of fees. Some costs associated with this type of loan include closing costs, appraisal fees, application fees, and other fees. These fees and expenses can add up, so it's important to factor them in when considering a home equity loan. Closing costs generally range from 2 to 5 percent of the loan amount, and other fees can set you back hundreds of dollars. 

If you are considering a home equity bank loan, there are a few things to know. First, this type of loan can be used for any expense and is an excellent way to tap into your home's equity. Second, loan terms will vary, so look for ones that suit your needs. Finally, fees will apply, so consider the total cost of the loan. To learn more, check out the site for a loan service in your area.