How Does The New Tax Law Affect Home Equity Loans?
On December 22, 2017 the President signed the Tax Cuts and Jobs Act of 2017. The new law makes many significant changes to the tax code, including doing away with the deduction for the interest paid on home equity loans.
Home equity loans allow homeowners to borrow against the equity that they have in their home. Home equity is the difference between a home’s market value and the remaining balance on the mortgage. Homeowners, generally, have two options: they can borrow a fixed dollar amount in the form of a home equity loan, or they can establish a home equity line of credit, which acts like a credit card with a specific debt limit based on home equity. Generally, the interest rate on a home equity line of credit adjusts with movements in market rates.