QandAs: Loans

What is a Home Equity Loan?

Answer:
A Home Equity Loan is a type of mortgage loan

that allows you to borrow money using the equity in your home as collateral. (Equity is the difference between what your home is worth and what you owe on it.) Home Equity loans are commonly used for home improvement and remodeling , college tuition, and other major expenses.

So basically, a Home Equity Loan can be considered a personal loan. You can use the funds for personal use or the funds can go towards anything you wish including paying off high interest loans or credit cards.

With a home equity loan, an additional mortgage is placed on your house to secure the debt. That’s why these loans are also known as second mortgages. The payments on an equity loan are due every month, just like your main mortgage, until the debt is paid off.

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