What Is a Home Equity Loan?
A home equity loan is a fixed-rate, lump-sum loan secured by your property as a second lien. Unlike a HELOC (revolving, variable rate), a home equity loan gives you the full amount upfront with a fixed interest rate and fixed monthly payments for the life of the loan. It sits behind your first mortgage and does not replace it.
Home equity loans are ideal when you know exactly how much you need and want the certainty of a fixed payment. Common uses include home improvements, debt consolidation, and down payments on investment properties.
Home equity loan vs. HELOC: Home equity loan = fixed rate, lump sum, predictable payments. HELOC = variable rate, revolving line, flexible draws. If you need a specific amount and want certainty, home equity loan. If you want flexible access, HELOC.
Who Home Equity Loans Are For
- Homeowners who want a fixed rate and predictable payments
- Borrowers who need a specific lump sum for a defined purpose
- Investors tapping equity for down payments on new properties
- Debt consolidation borrowers who want to lock in a rate
Key Features
Fixed interest rate for the life of the loan. Lump-sum disbursement at closing. Terms from 5-30 years. Combined LTV up to 80-90%. Available for primary residences and some second homes and investment properties. No impact on your existing first mortgage rate.