Definition
A second mortgage that allows homeowners to borrow against their equity in a lump sum at a fixed interest rate. Home equity loans are commonly used for home improvements, debt consolidation, or large expenses. Lenders typically allow borrowing up to 80-85% of the home's value minus the existing mortgage balance. Interest may be tax-deductible if used for home improvements.
Related Mortgage Terms
- Equity
The difference between your home's current market value and the remaining mortga...
- Refinance
The process of replacing an existing mortgage with a new one, typically to secur...
- HELOC
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your ...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.