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Tapping Home Equity: How, When and Why It Makes Sense

As a mortgage is paid down, the difference between what the home is worth and what is still owed — the equity — grows. This equity increases further if the value of the home continues to increase. Equity is considered an asset of the homeowner and is often the largest asset they hold.

Home equity loans provide a way for homeowners to access that asset. This type of loan uses the home as collateral, offering better terms and lower interest rates than unsecured debt like a credit card, but many homeowners don’t realize this option is available to them.   Here are five common questions we often receive about home equity loans and their potential purpose: