What is a home equity loan?

A home equity loan (second mortgage) lets you borrow against your home equity in a lump sum with a fixed interest rate and fixed monthly payment. Maximum LTV is typically 85% (home value × 85% − first mortgage balance). Rates are usually 1–2% higher than first mortgages because they're subordinate liens.

Home equity loan vs. HELOC — which is better?

Home equity loan: fixed rate, lump sum upfront, predictable payments — good for one-time expenses (renovation, debt consolidation). HELOC: variable rate, revolving credit line, draw during draw period — good for ongoing or uncertain expenses. HELOCs carry rate risk; loans provide certainty. If rates are rising, a fixed home equity loan is usually safer.