What is fixed home equity loan? Well, before starting to talk about this, firstly we need to know what the home equity loan is. This is basically a kind of loan in which the money borrower uses the equity of his other home as the guarantee or collateral. In other words, it is like the mortgage when you use bank or pawnshop as the lender party. It is quite profitable for both party and it is also often used to overcome some financial problems like medical bills and education. Although it is in general almost the same with traditional mortgage, there are some characteristics which are a little bit different. An example is that it is only able to use as the refinance, not to buy any other properties like home.
So, what are the fixed home equity loans?
The home equity loan can be said as fixed as long as the money to get is fixed as well. Besides, the number of interest rates to be paid is also fixed as well. It is often considered as profitable particularly for the borrower. In general, there are two types of interest rates that must be paid by borrowers. The first is fixed rates and then the second is floating rates. Fixed rate means that the interest rate to be paid is just the same from the beginning of installment until the end. Meanwhile, floating rate means that the interest tends to be floated or increased. It means that the longer period of time you take, the more also installment to be paid. On the other hand, many banks or companies are now applying the combination of both. It is when the borrower can pay the fixed rates at the beginning or first years and then it is followed by the floating rates.
The benefits of fixed home equity loans
Of course, as it has been mentioned before, the main benefit is regarding the installment which tends to be fixed and steady. You don’t need to pay more even at the end of your installment period. However, many money lenders tend to give another rule related to this kind of loans. It is that the period of installment tends to be shorter. It is because that the first party must want to get another party as well. More than that, this kind of home equity loan is also commonly used for fulfilling short-term necessities. So, are you interested to use thefixed home equity loan?