Home Equity Loans and Lines of Credit

If you own a home and have equity in it, you might consider taking out a home equity loan as a source of funds for your child's private school or college tuition. Alternatively, you might decide to refinance your mortgage to one with a lower interest rate or a longer term in order to create more discretionary income each month that can be used for education purposes. Either way, home equity is an excellent source of financing, especially for larger purchases.

With a home equity line of credit, the lender establishes a credit limit, that you can access as you need (up to the limit), whenever you need it, by writing a check or using your credit card.

With a home equity loan (often referred to as a second mortgage), you borrow a fixed amount (typically no more than 80 percent of the equity in your home), which is transferred to you in full at the time of the closing. You must then repay that amount over a fixed term.

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