Home Equity Loan

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Related to Home-Equity Loans: Home Equity Line of Credit

Home Equity Loan

A loan in which the one borrows against the value of one's home. That is, the collateral of a home-equity loan is one's house. The amount in these loans is generally the difference between the homeowner's equity in the house and the market value of the house. The homeowner receives the amount of the loan in a lump sum, and may use it to finance other purchases or ventures. If a home-equity loan is not paid off, the lender may take possession of and sell the house in order to pay for the loan; this can occur even if the homeowner continues to make payments on his/her mortgage. These loans generally have variable interest rates, which are nonetheless still lower than most other lines of credit. Home-equity loans are sometimes called second mortgages or equity loans. See also: Reverse mortgage.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Home equity loan.

A home equity loan, sometimes called a second mortgage, is secured by the equity in your home.

You receive the loan principal, minus fees for arranging the loan, in a lump sum. You then make monthly repayments over the term of the agreement, just as you do with your first, or primary, mortgage.

The interest rates on home equity loans are generally lower than the rates on unsecured loans. However, when you borrow against your equity you run the risk of foreclosure if you default on the loan, even if you have continued to make the required payments on your first mortgage.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

Home Equity Loan

Same as Second Mortgage.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Using a home-equity loan to finance personal expenses often results in an after-tax borrowing cost that is better than a credit card or unsecured bank loan.
While most home-equity loans involve middle- to upper-income borrowers, the low-end market and its tantalizingly high interest rates have attracted the attention of financial institutions from Citibank to Security Pacific to the former Bank of New England.
Homeowners have a range of options for accessing their equity, from cash-out refinancing to home-equity loans to HELOCs, and the decision is not necessarily a simple one to make.
Home-equity loans or lines of credit are logical products to promote to new mortgage holders.
CoreLogic said that roughly 3.8 million underwater borrowers hold first liens without home-equity loans. Roughly 2.5 million underwater borrowers hold both first and second liens.
Timothy Campbell, Citigroup's senior vice president and director of government relations, gave this example: "When you understand how America's system of credit and obtaining credit is set up, your ability to pick up your phone and call a bank and get a mortgage or home-equity loan unsecured almost instantly is incredible," he said.
As of May 2010, home-equity products are still rolling into the 30-plus-day delinquency category at historically high levels, with second-lien home-equity loans outpacing both first-lien and second-lien HELOCs in terms of early-stage delinquency (see Figure 1).
Home-equity loans of any type are a big problem because they aggravated the credit woes of the subprime sector and spread those woes into the alt-A and prime markets.
Homeownership is at an all-time high in the United States, making home-equity loans and home-equity lines of credit (HELOCs) an attractive resource for borrowers looking to leverage their equity and gain tax advantages.
* Case-by-case assistance to help customers by extending terms and deferring payments on their existing mortgage and home-equity loans.
It will continue to make first-mortgage and home-equity loans through its branches, loan officers, telephone loan centers and Web site.