Standard Home Equity Loan

A standard home equity loan is when the lender provides the borrower with a lump sum loan and uses the borrower’s home equity as collateral. The borrower may then use the loan for consolidating high interest debts. The loan must be repaid over a specific period (normally 10 to 30 years) and the payment schedule usually requires equal payments. The interest rate can be either fixed or variable with the variable interest rate normally being between 1 and 3 points above the prime rate.