What is a home equity loan?

A home equity loan is a type of loan that uses the equity in a person’s home as collateral. The amount of the loan is usually based on the amount of equity one has in their home. Equity is the difference between the value of the home and the amount that is owed on the mortgage. A home equity loan can be used for a variety of needs, such as home improvements, investments, and debt consolidation. In New York, residential real estate law dictates that the amount of a home equity loan cannot exceed the value of the home minus any existing mortgage and other lien amounts. The loan may be secured or unsecured, and interest rates may be variable or fixed. There are usually many potential lenders one can choose from when considering a home equity loan. Additionally, a home equity loan can be structured in many different ways depending on the borrower’s needs. A borrower should carefully consider the loan terms and make sure that they are comfortable with the terms and that they can make the loan payments on-time.

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What is a home equity loan?

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