A home equity loan, also known as a home equity installment loan or a second mortgage, is a type of consumer debt.; Home equity loans allow homeowners to borrow against the equity in their residence.

Cash-Out Refinance vs. Home Equity Loan: An Overview . A cash-out refinance pays off your old mortgage in exchange for a new one, ideally at a lower interest rate than your current mortgage.

Applying for a home equity loan can be quite a process, so check to see if you meet the requirements before you spend time filling out paperwork. Specifically, you should find out your credit ...

Investopedia Home Equity Loan Example . Many lenders have a maximum CLTV ratio of 80%. If your home is worth $300,000 and you have no existing mortgage, ...

Home equity loans are secured by your equity, which is the difference between the property's value and any existing mortgage balance. For example, if you owe $150,000 on a home valued at $250,000 ...

Using the example above, if you took out a home equity loan based on your $500,000 in equity, you could borrow $300,000 and use that as a 20% down payment on a $1.5 million home.

Home equity loans are typically charged at a fixed interest rate, although some lenders do offer adjustable options. This choice can affect your monthly payments and the total cost of your loan ...

1. Decide if a Home Equity Loan Is Your Best Option . Like any kind of borrowing, home equity loans have their pros and cons. On the plus side, if you have enough equity in your home, a reliable ...

You can arrange a home equity loan yourself or use a broker. Brokers charge a fee, but they may be able to secure better terms for the loan that saves you money.

Home equity loans are usually unaffected by divorce—you're still responsible unless the lender releases you from the loan or your former spouse refinances the loan.

Elysse Bell is a finance and business writer for Investopedia. She writes about small business, personal finance, technology, and more. Maskot / Getty Images A home equity loan and a personal loan ...

Furthermore, both loan types typically let you borrow 60-85% of your home's equity, come with 2-5% in closing costs, and require your home as collateral—meaning the lender could seize it if you ...