Home Equity Loan

A home equity loan is a type of loan in which the borrower uses the equity in his home as collateral.

These loans are sometimes useful for families to help finance major home repairs, medical bills or college educations.

The borrower receives a lump sum at the time of the closing and cannot borrow further. It is possible to borrow up to 100% of the assessed value of the home, less any liens. These fixed rate loans can be amortized up to 15 years with a 3, 5, or 7-year balloon payment. When the balloon balance is due, the borrower can pay off the balance or refinance.