Mortgage Handbook

Home Equity Loans

A home equity loan is one way to convert the accumulated equity in one’s home into liquid capital, without selling the home itself. Much like mortgages (and often referred to as “second mortgages”), these loans are backed by real estate, and thus carry considerably lower interest rates than unsecured debt.

Taking out a home equity loan can be a good way to finance unanticipated expenses, including but not limited to home renovations, medical bills, and legal settlements.

It is important to remember, however, that your home depends on your ability to pay back the loan according to a set of agreed upon terms. Failing to do so will almost certainly result in foreclosure, and the forced sale of your property at a below-market rate.