what is equity loan

Best answer

Second mortgage

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  • What is a home equity loan?

  • 1 A home equity loan, also known as a 鈥渉ome equity installment loan鈥?or a 鈥渟econd mortgage,鈥?is a type of consumer debt. 2 Home equity loans allow homeowners to borrow against the equity in their residence. 3 Home equity loan amounts are based on the difference between a home鈥檚 current market value and the mortgage balance due. More items…

  • Can you borrow against the equity in your home?

  • Borrow Against Equity in Your Home. If your home is worth more than you owe on it, a home equity loan can offer funds for anything you want鈥攜ou don鈥檛 just have to use the money for home-related expenses. However, using your home to guarantee a loan comes with risks. A home equity loan is a type of second mortgage.

  • What is the difference between a HELOC and a fixed-rate home equity loan?

  • Fixed-rate home equity loans provide one lump sum, whereas HELOCs offer borrowers revolving lines of credit. Essentially, a home equity loan is akin to a mortgage, hence the name second mortgage. The equity in the home serves as collateral for the lender.

  • How do I obtain a home equity loan?

  • Obtaining a home equity loan is quite simple for many consumers because it is a secured debt. The lender runs a credit check and orders an appraisal of your home to determine your creditworthiness and the combined loan-to-value ratio.

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