ive only skimmed the other posts so idk if this has been said already. usually when you take out a home equity loan, you get x.xx% interest which is usually cheaper than any other type of loan. when you initially start the loan, the only payment you have to make on the loan is the interest, you dont have to pay on the principle. basically, if you take out $10,000, the only payment you HAVE to make is the monthly interest on $10,000, and anything else you send them goes to principle. the way that works is your interest rate is variable and can change month to month, either up or down. you have the option to ‘‘lock in’’ your interest rate at any time, and it usually ‘‘costs’’ you .5-1%. when you lock in your interest rate is when your real payment term begins.
example:
you take out $10k @ 4%. for the first 6mo you only pay the interest on the loan. on the 7th month the interest rate goes up to 5%. you decide in the 7th month to lock in your interest rate so it doesnt go up any more. the ‘‘cost’’ of doing so is 1%, so your interest rate is now 6% and this is when you start your 60 month payment term.