The essential guide
What is home equity loan?
A home equity loan usually provides one lump sum with a fixed repayment schedule. It is secured by your home and sits alongside your first mortgage.
Quick path
Explore home equity loansHow it works
The basic idea
A fixed rate, a fixed payment, and the full amount up front. See what you qualify for. Providers evaluate eligibility and set their own terms. Your goal is to compare equivalent offers, understand the complete cost, and choose only what fits comfortably within your budget.
What to compare
- APR and fixed payment
- Closing and appraisal costs
- Available loan-to-value range
- Prepayment or early-closure terms
When it may make sense
- You know the amount you need
- A predictable payment matters
- The expense is important enough to secure with your home
Risks and watchouts
- Borrowing against a volatile home value
- Resetting unsecured debt without changing spending
- Overlooking the risk of foreclosure
What to prepare
- Home value estimate
- Mortgage payoff amount
- Project or debt payoff total
- Income and insurance information
Common questions
Lump sum or line of credit?
Take the lump sum when you know the cost up front, like a single renovation or a payoff. Choose a HELOC when the spending is spread out and you would rather not carry a balance you have not used yet.
Is the interest tax deductible?
It can be when the funds are used to buy, build, or substantially improve the home securing the loan. Talk to a tax professional about your situation.