What is Home Equity Loan?
A home equity loan is a second mortgage that provides a lump sum with a fixed interest rate and fixed monthly payments, secured by your home's equity.
A home equity loan is a second mortgage that lets you borrow a lump sum against your home's equity, typically with a fixed interest rate and fixed monthly payments over a set term. Borrowers use it for major expenses like renovations, debt consolidation, or education. Watch for closing costs, a higher interest rate than first mortgages, and the risk of foreclosure if you default. Your total debt secured by the home, including the first mortgage, generally cannot exceed a certain loan-to-value ratio, often around eighty percent. Unlike a HELOC, you receive all funds at closing and cannot re-borrow as you repay.
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