Home Equity Loan Basics: Standard Home Equity Loans

A brief introduction to standard home equity loans, including their specifications and benefits.



A standard home equity loan is also referred to as a term loan or a closed loan, meaning the borrower is given a lump sum from the lender. The term and the interest rate for this type of loan are usually fixed.

Like many other loans, standard home equity loans are paid in monthly installments and the borrower is not entitled to any additional money once the lump sum has been received. The nature of this loan is very similar to a first mortgage because the homeowner is able to know the amount of payments that are due in advance.
Standard Home Equity Loan Benefits

Some benefits of home equity loans include unchanging rates and tax advantages. Borrowers can deduct up to $100,000 worth of interest payments from their federal tax returns. With these advantages, this type of loan seems very appealing.

Standard home equity loans work best for homeowners who need money for large expenses such as home improvements, weddings or consolidating bills. If you know exactly how much money you need, this loan could be the loan you're looking for, but if you think the amount you need may change, look into a home equity line of credit.