Home Loan Glossary

This glossary should help you better understand the different types of loan terms.

Home Equity - The dollar amount between the appraised value of your home and how much you currently owe on your home.

Home Equity Line of Credit - A home equity line of credit allows you to access money at any time. With a home equity line of credit you only repay the amount that you borrow at any given time. A home equity line of credit is a revolving line of credit and your home is used as collateral.

Home Equity Loan - A loan which is taken against the equity in your home. This varies from a home equity line of credit because you do not have the convienence of the revolving line of credit. You have to reapply for another equity loan in the future if needed.

Percentage Loans - You see and hear about 80%, 90%, 100% and even 125% home equity loans or lines of credit. This basically means that you are borrowing a certain percentage against the equity you have in your home. For example; if you have $50,000 in equity and a lender tells you he/she will loan you 90%, they are basically telling you that you can borrow $40,000 against your equity.

$50,000.00 equity X 90% = $40,000.00

Home Loan - This is a loan which is used to purchase a home.