Home Equity Loan
A home equity loan is rather simple - you essentially take out a second mortgage on your house, borrowing money against the value of your house that you do not still owe money on. For example, if you have paid of 40% of your loan principle, you could take out a Home Equity loan on that 40%, up to the maximum value of your home, using the home as collateral against repayment of your loan. The market value of your home is used to determine how much this amount is and can vary dramatically depending on where you live, the state of your home, and the perceived market status when you apply for your loan. If you fail to repay your loan, you home will be forfeit to the bank as a means to recuperate their losses.
Fixed and Adjustable Rate Loan
This refers to the rate at which your loan is set. When a rate is fixed, the interest rate you are quoted on your application will never change - if you can get a fixed rate loan when the market is down, you can save a large amount of money. On the other hand, if you get an adjustable loan and the market booms, the rates on your home could skyrocket as a result. Be sure to know what the current rates are and how they will affect your payment over time.
This type of loan will combine both the fixed and adjustable aspects of a regular loan. You will receive a fixed rate to start with and your monthly payments will not change at all. After a period of time passes, often known as your adjustment period, the loan will change to start fluctuating with market rates, making your payment change in time.
Secured and Unsecured Loan
These loan types refer to whether or not you need to provide collateral to obtain your loan. In the case of a secured loan , you can usually overcome bad credit or other circumstances by putting up your home as collateral against the borrowed amount. An unsecured loan will often have a higher rate as a result and different repayment terms. How these loans operate will depend on your credit and financial situation at the time you take out the loan.