home equity loan
Definition
Noun: A home equity loan is a type of loan in which a homeowner uses the equity (the current market value of the home minus any remaining mortgage debt) in their property as collateral. The borrower receives a lump sum of money and repays it with fixed payments over a set period.
Usage
This term is used specifically in the context of personal finance, banking, and real estate. It refers to a secured loan product. - They took out a home equity loan to finance their kitchen renovation. - The bank offered a competitive interest rate on the home equity loan.
Advanced Usage
- Home Equity Line of Credit (HELOC): Often compared with a home equity loan. A HELOC is a revolving line of credit also secured by home equity, whereas a home equity loan provides a single lump-sum disbursement.
- We decided on a home equity loan instead of a HELOC because we needed one large amount for a specific project.
Variants and Related Words
- Second Mortgage: A common synonym for a home equity loan, as it is typically a lien subordinate to the primary mortgage.
- Equity Loan: A shortened, informal form of "home equity loan."
Synonyms
- Second Mortgage
- Equity Loan
Related Phrases
- Tap into home equity: To access the value of one's home equity, often through a loan or line of credit.
- They decided to tap into their home equity to pay for their child's college tuition.
Noun
-
a loan secured by equity value in the borrower's home
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