Home Equity Loan
A fixed-rate, fixed-term second mortgage that delivers a lump sum upfront, secured by the equity in your home.
Quick answer
Home Equity Loan: A fixed-rate, fixed-term second mortgage that delivers a lump sum upfront, secured by the equity in your home. Typical cost: 8–10% fixed APR in 2025; 2–5% closing costs typical..
Why it matters
Best when you know exactly how much you need and want predictable payments. Lower rate than personal loans because the home is collateral.
Typical cost
8–10% fixed APR in 2025; 2–5% closing costs typical.
Pros
- • Fixed payment for the life of the loan
- • Lower rate than personal loans
- • Interest tax-deductible when used on the home
Cons
- • Home is collateral
- • Less flexible than a HELOC
- • Closing costs on lump sum even if you don't use all
Common uses
- • One-time large renovations
- • Pay-off of higher-rate debt
- • Major medical or education expenses
Alternatives
HELOC (variable, flexible)Cash-out refiPersonal loan
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Frequently asked questions
- Home equity loan vs HELOC?
- Home equity loan = fixed lump sum and fixed payment. HELOC = revolving line with variable rate, draw period, then repayment period.
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