What is a home equity loan?

A home equity loan is a type of loan that uses the equity that you have built up in your home as collateral. Equity is the difference between the value of your home and the amount that you owe on it. In Illinois, a home equity loan is offered as either a closed-end or open-end loan. With a closed-end loan, you are given a lump sum to use as you wish, and with an open-end loan you are given a revolving line of credit. Typically, when a home equity loan is taken out, the borrower will receive a lump sum of cash that he or she can use for any purpose they see fit. This loan is usually secured by the equity in the home, which is why it is considered a low-risk loan for the lender. In Illinois, a home equity loan is governed by the Home Equity Loan Act, which regulates the terms of these loans. Under the Act, consumers have certain rights such as a right to rescind the loan or the right to opt out of the loan agreement if they wish. Additionally, lenders are required to provide borrowers with certain disclosures regarding the terms of the loan. Overall, a home equity loan can provide borrowers with financial freedom and the ability to use the equity in their home to finance major expenses. If you are considering taking out a home equity loan in Illinois, it is important that you understand your rights under the Act and review the terms of the loan carefully before entering into an agreement.

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