With a home equity line of credit (HELOC), you're approved for revolving credit up to a certain limit. As under prior law, the loan must be secured by the taxpayer’s main home or second home (known as a qualified residence), not exceed the cost of the home and meet other requirements.Ī home equity loan (often referred to as a second mortgage) is a loan for a fixed amount of money that must be repaid over a fixed term. Under the new law, for example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, is not. 22, suspended from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan. The Tax Cuts and Jobs Act of 2017, enacted Dec.
For this reason, lenders typically offer better interest rates for this type of financing than they do for other, unsecured types of personal loans. Home equity financing uses the equity in your home to secure a loan.
Is a Home Equity Loan or Line of Credit Right for Me?
