Being a homeowner has its own set of benefits. One of them is tapping the home equity when an emergency occurs. While paying major expenses, property owners can always rely on home equity loans. But like every other aspect, it has some benefits and drawbacks.

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Pros

Fixed interest- The interest rate on a home equity loan is always fixed. No matter what the circumstances are, the interest rate never changes. Owners will be aware of how much they have to pay as interest from the beginning of the process.

Lower interest rate- With a stable interest rate, home equity loans offer comparatively lower interest rates. Because equity loans are secured due to the house being stable. Typical personal loans or credits are not secured as they don’t have any property or safety amount on hold.

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Long repayment terms- Benefits of home equity also offer long-term loan payment time. Owners can take as long as 20 years to submit the loan amount.

Cons

Chances of losing the home- The home is being used as a security fund for the loan. In case of not being able to repay the loan on time, there is a possibility of losing the home. Similarly, if the home value declines, the debt can be more than the actual house price.

It requires excellent credit- Home equity loans offer many benefits like comparatively less interest and a long-time payment schedule. Those facilities are provided if the credit score is good enough to afford the loan.

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Must need substantial equity for the home- The home equity loan will only qualify if the equity bar is at a certain point. It generally requires 15 percent to 20 percent in equity in the property.