A home equity loan is a fixed-rate second mortgage, secured by the property, which allows a borrower to use the equity in their home to receive a lump sum of cash. Home equity loans must be repaid over a set period of time, and since they have a fixed rate, payments are the same each month.
The cash from home equity loans is often used for large purchases with set costs, such as a car, education, or other large bills. Home equity loans are an alternative to home equity lines of credit and cash-out refinancing for borrowers who need a set amount of cash.
