Home Equity Loan With No Mortgage
You've paid off your mortgage, congratulations
How a Home Equity Loan Works When You Have No Mortgage
You receive a lump sum amount from the lender
Immediately start paying it back with a fixed monthly payment, say 10 or 20 years.
Because it is secured by your home
Home equity loans will have lower interest rates than unsecured loans, such as credit cards or personal loans.
The downside is that your home will be at risk if you can't pay it back.
However, a home equity loan can be somewhat less risky.
If you are not also taking out a regular mortgage because you will have less total debt.
If you are also not taking out regular mortgage because you will have less total debt.
A situation in which falling home prices leave you due for more than the value of your home.
Being underwater may make it impossible to sell your home
Unless you are able to come up with enough money to fully pay off your loans from other sources.
Your equity is whatever you could sell the property for today.
Home Equity Loan vs. HELOC When Your Home Is Paid Off
A home equity loan isn't the only way to attract your equity. The second is the Home Equity Line of Credit (HELOC).
Initially instead of a lump sum amount as is the case with home equity loans.