"What is a home equity loan? Do I already have one?"Home Equity Loans are also know as HELOC. They are good for emergency money and are very inexpensive to maintain.
A home equity loan or home equity line of credit (HELOC) is a loan against the equity in your property. The loan is usually a second, smaller mortgage. A home equity loan is a good way to borrow because the interest paid is deductible and usually at a lower rate than credit cards.
If you need to borrow smaller amounts of cash a HELOC usually makes more sense then a standard mortgage refinance. Paying thousands in closing costs a a standard mortgage to get $25,000 makes no sense when you can generally get a no closing cost HELOC much easier.
Some lenders offer No Cost Home Equity Loans, where the lender picks up the tab for the closing costs of the loan. This includes title fees, underwriting fees, processing fees, and other normal loan fees. Many times with this type of loan, the appraisal has already been done on a 1st mortgage closing simultaneously, so the appraisal fee is also not needed. Other times, the property triggers a property inspection waiver, which means the lender doesn't require an appraisal.
When you purchased your home did you use combo financing? If so then you may already have a home equity loan as the smaller second mortgage. Combo financing is commonly used to avoid paying non-tax deductible Private Mortgage Insurance, or PMI.
