A home equity loan that lasts for a specific term. Closing costs Costs incurred by the borrower in the course of finalizing a home equity loan . See early closing cost reimbursement . Collateral An asset pledged as security in a loan. In a home equity loan , the home is the collateral.
Lenders use it to determine whether to approve a loan and to set the terms.
A person with a good credit report is likely to get a better interest rate than someone with a poor credit report. Credit score A number, roughly between 300 and 800, that reflects the credit history detailed by a person's credit report . Lenders calculate this number with the assistance of computer systems as part of the process of assigning rates and terms to the loans they make. By taking a credit card balance at 18 percent interest and moving it to a home equity line with 8 percent or 9 percent interest, people may save thousands of dollars. Home equity line interest is usually tax- deductible too, magnifying the savings.