Home equity loans let you borrow using the equity you’ve built up in your home as collateral. You can often borrow more money at a lower interest rate than with other types of loans. And, in many cases, you can deduct the interest you pay on the loan when you file your tax return, reducing the actual cost of borrowing still further. Most of the other interest you pay, on car loans or personal loans, for example, isn’t deductible. With the new tax law they may be limitations on tax deductibility. With a home equity loan, you borrow a lump sum, usually at a variable rate of interest, although some fixed-rate loans are available. You pay off the debt in installments, just as you repay your mortgage, with some of each payment going toward the interest you owe and the rest toward the principal, or loan amount. At the end of its term, or payment period, the loan is retired. You may have to pay closing costs on your loan, just as you did for your first, or primary, mortgage. But lenders may offer loans with no up-front expenses as part of a promotional deal. You might also be offered   Read more…

Buying on time, or paying for something while you’re using it, was introduced by Isaac Singer in 1856 as a way to sell his sewing machines. At $5 down and $5 a month, the average family could afford a $125 machine—otherwise impossible on a typical $500 annual income. When you need money to buy a car, pay college tuition, fix up your home, or for anything else that requires an immediate cash outlay, you are often able to borrow the amount from a lender such as a bank or a credit union. If you know how different types of loans work and the particular features they offer, you will be in a better position to look for the one that will be best suited for you. In some ways, of course, all loans are alike. You borrow money, called the principal, and agree to pay it back over a specific term, or length of time, with interest. But the conditions of the loan can affect how much you can borrow and how much the loan will cost you. Some common conditions include: Paying in installments or in a lump sum, whether the interest charged is fixed or adjustable or whether   Read more…