That's the Law, and it's your right to know!

By Robert A. Massi

Recently, a reader of this column wrote to me and asked me to explain a term she wasn’t quite familiar with, although she had heard about them all of her life: home equity loans. Sometimes we take for granted that our read-ers will understand commonly used real estate terms, but it never hurts to write about them in more detail to make sure we fully understand their meanings.
Home equity loans allow homeowners to tap equity that has accumulated in their property over the years. This has become an increasingly popular method of borrowing money. I’ve known people who have used equity loans for investments, new cars, and to help pay for their expenses, but it is important to use the money wisely. If your loan is not repaid on time, you can lose your home.
In fact, you will be at risk if you default on home equity loan payments, even if you are still making your regular mortgage payments on time.
You should also know that when the loan is granted, the lender retains a legal interest in the property to secure payment. If the home equity loan is not paid, the lender can force the foreclosure or sale of your property.
Also, be sure to shop around for a home equity loan like you would for any other type of loan. There is no specified interest rate, and lenders usually remain competitive in this area. Remember, even one percentage point difference can either save or cost you money over the term of a loan. Consider, too, loan origination fees and other up-front costs before making your decision.

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