Home Equity Loan

Definition: A home equity loan is borrowing secured by the owner's home equity, commonly paid out as a lump sum and repaid over a stated term.

Example

A homeowner receives a single loan advance to fund a renovation and repays it in installments.

Keep the distinction clear

A home equity line of credit, or HELOC, generally permits repeated borrowing up to a limit during a draw period. A home equity loan is not automatically a revolving line of credit.

Related terms

Equity · Second Mortgage · Collateral

Keep studying

Loan-to-Value, Down Payments, Equity, and PMI

References: CFPB: home equity loans and HELOCs

Pronunciation (US): hohm EK-wih-tee lohn (capitals show stress)

Pronunciation reference: Merriam-Webster