How does a home equity loan work?

newmoon: How does a home equity loan work?
I need to know all the details and if it is a good choice. I have payed off my vehicle and credit cards and have none, but I have alot of student loan debt. Our dilema are the student loans. And paying them. I have heard about home equity loans and heard about being tax deductible. How do they work? Do they look bad on your credit? How much can you borrow ? Does it add to the years to pay off your house? We only have eleven years left to pay as it is right now. Just wondering what is a good option. I even thought that after I graduate and am working that my pay checks can go all to my student loans. I am just looking for some good ideas without having to stress out about debt and bills and such. We are trying to pay our bills off and so far have done good. But those student loans are looming in the background.

Answers and Views:

Answer by cmruffin1
a home equity loan is a loan tha you can borrow from. its just like a second mortgage. yes it will add to how much longer you will own you home. you can borrow the difference in how much left you have to pay on your home and what you already paid. shot me an email if you would like me to help you get this loan. depending on what state you live in.

Answer by PCL-R
I’m not sure why you would want to get a home equity loan to pay off student loans. Typically interest rates on student loans are much lower than home equity loans. It is true that you can use interest paid on a home equity loan as a tax deduction, but you can also use interest paid on student loans as a deduction.

Answer by Chris M
Pulling equity out of your house does not sound like a good option to refinance your student loans. You said you are trying to pay your bills off, what you will actually be doing is trading out student loan debt for home equity debt, which is a bad trade off and is not paying off your bills since you won’t be reducing your debt. Most likely the student loans will carry a lower interest rate than the home equity loan, but more importantly, if you can’t afford to make student loan payments at some point in your life your lender will work with you because it is unsecured debt. If you fall on hard times and can’t pay your ORIGINAL purchase money mortgage, the lender can foreclose on your home since that was the collateral but (in most cases) can’t come after your other assets. When you refinance your home, pull equity out of your home, or accrue any non-purchase money debt against your home you are exposing the rest of your assets to your lender. If you elect to do what you suggest and you are unable to make payments at some point in your life, your lender can come after all of your assets as opposed to none, with the student loan.

Also, student loan interest is tax deductible.