Since Americans have taken advantage of the real estate
and mortgage industry’s recent decade of dominance,
is there a rainbow on the other side of the lending tree?
According to certain financial analysts, the new phase of
the lending industry calls for a forecast of a myriad of
many different types of home equity loans.
Morgan Stanley prognosticates that through the year 2010,
there will be a twenty percent increase in home equity loans.
To attain a better understanding or rather the difference
between the various home equity products, the following
provides a brief understanding of the two major terms associated
Equity: The market value of real estate property, minus
the amount of existing liens or outstanding due on the property.
If you have heard the term “equity build-up”
it is the reduction of the principal of the home loan or
mortgage as documented by periodic payments. Over time,
equity build-up takes places as more payments are made on
the property. In simpler terms, it is also considered to
be the difference (equity) between the property value and
amount of the lien.
Home Equity Line of Credit (HELOC) or Equity Loan: Almost
one in the same, an equity loan is a "home equity line
of credit." The mortgage product is utilized by the
homeowner who has paid down the principal of their loan.
The advantage of an equity loan is that, from time to time,
it allows the owner to borrow funds against the equity that
exists in their property without being required to reapply
for a loan.