Mayday Payday Loan - Equity Loan

Equity Loan Options

An equity loan is a secured loan, secured by an underlying asset, specifically, your equity in it. Normally an equity loan is a secondary loan, meaning that in the event of default and the asset is sold, the first loan is repaid first, and the equity loan is paid with the remaining value.

What is Equity?

Equity references the partial ownership of the asset. The term is often confusing for people, because they here it in reference to stocks, called equities because stock represents a partial ownership of the underlying asset, the company. In the case of home equity (or car equity), it represents your value after repaying the primary lien holder, i.e. the bank holding your first mortgage. If you have a house worth $200,000, and your mortgage is for $140,000, you have $60,000 in equity.

What makes an Equity Loan Special?

Compare the rates on your mortgage, a type of equity loan , and the rates on your credit cards, an unsecured loan. By securing the loan, the creditor is less worries about collected their money, so the interest rate is lower. In addition, home owners can deduct the interest on their mortgages from their Federal Income taxes, making the equity loan even cheaper.