what is a home equity loan?
Home equity loans are known as personal loans, acquired by using a property as collateral. Lenders tend to disburse more money with this type of loan because they represent less risk. It is called a home equity loan because a guarantee is signed in the name of the lender on your property. It gives the lender more leverage to take the property, if you default on the loan. The money can be used for whatever you want: trips, education, investments, cars or debt payments. The entity or financial institution that gives you the loan will demand a mortgage on the property.
The Application Process
When you submit an application for a home equity loan, the lender will ask for information about income and household documents, among others. These evaluations will be made:
- Assessing the viability of credit: your ability to pay according to income
- Evaluation of the title of the property, which will be checked to make sure that the property can be mortgaged and there are no restrictions and taxes owed
- Appraisal: The services of a specialist will be hired to determine the commercial value of the property.