Home Equity Loan

Home equity loan summary:

  • A home equity loan allows you to borrow money against your home, even if you’re still paying off your mortgage. 

  • Home equity loans typically feature a fixed interest rate and are repaid in equal monthly installments.

  • You could use a home equity loan to fund a large expense or consolidate debt.  

Home equity loan definition and meaning

The home equity in your property is the difference between the home's value and the amount you owe on the mortgage. For example, if your home is worth $400,000 and you still owe $200,000 on your mortgage, you have $200,000 in home equity. A home equity loan allows you to borrow against that equity. A home equity loan is a mortgage.

There are attractive benefits associated with a home equity loan, but there's also risk. Your home acts as collateral. If you fail to repay the loan, you could lose the home.  

Key concept: A home equity loan allows you to borrow against your home, if you have enough equity. 

More about home equity loan

Home equity loans are often called second mortgages because, for the homeowner who still owes money on their first mortgage, it's another loan secured by the home. 

You could use a home equity loan for just about any purpose. Many people use a home equity loan to cover a large expense, like home repairs or medical bills, or for debt consolidation. 

In the case of debt consolidation, a home equity loan could mean significant savings. Home equity loans typically have lower interest rates compared to the rate on credit cards and most personal loans. 

Home equity loan: a comprehensive breakdown

Home equity loans have plenty of attractive benefits, including:

  • Fixed interest rate. Home equity loans typically feature a fixed interest rate, so you never have to worry about the rate changing.

  • Lower interest rate. The interest rate on a home equity loan is typically lower than the rates on unsecured debt like personal loans and credit cards. 

  • Flexibility. Lenders usually have few restrictions on what you can do with your home equity loan money. You could pay for a wedding, renovate your kitchen, or use your loan to consolidate higher interest debt.

  • Lump-sum payment. With a home equity loan, you receive the entire loan amount upfront. 

  • Potential for tax deduction. According to the IRS, for tax years 2018 through 2025, if a home equity loan is used to "buy, build, or substantially improve the residence," interest paid on the funds may be deductible, subject to certain dollar limitations. (Talk to a tax professional about your specific situation.)

Home equity loans vary by lender, so shop around before making a final decision. 

PERSONAL LOANS

Consolidate debt with a personal(ized) loan

Simplify your life—consolidate your debts into one fixed monthly payment.

Home Equity Loan FAQs

If you’re choosing between a cash-out refinance and a home equity loan, one isn't absolutely better than the other. Which one will work best for you depends on your plan. Both loans allow you to borrow against your home equity, using your home as collateral. However, with a cash-out refinance, you replace your existing mortgage with a new one. With a home equity loan, you keep your mortgage and add a new loan. 

A home equity loan might be a better option if mortgage rates are higher now compared to when you got your mortgage. It wouldn’t make sense to trade your mortgage for a new one that’s more expensive.

Normally, yes, but not necessarily a traditional in-person appraisal. Home equity loan lenders often use something called Automated Valuation Model software to verify the value of your property.

The process is simple, secure, and streamlined.

  1. Submit an Online Application: Receive a pre-qualification decision in 2 minutes or less with our automated decisioning engine. 

  2. Optional Consultation: If you’d rather chat with a real person, we offer a fast, free, and objective assessment of your eligibility for our loan program. In most cases, a full inspection of your home will not be necessary as we use an automated valuation system to determine your home’s value.

Receive Funds: Close and receive funds in 10 - 12 days. (1)1

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Personal loans are available through our affiliate Achieve Personal Loans (NMLS ID #227977), originated by Cross River Bank, a New Jersey State Chartered Commercial Bank, Equal Housing Lender. Loan applications are subject to credit review, underwriting criteria, and approval. Loans are not available in all states and available loan terms/fees may vary by state. Loan amounts range from $5,000 to $50,000. For loans $35,000+ must have a minimum 660 credit score. APRs range from 8.99% to 29.99% and include applicable origination fees that vary from 1.99% to 8.99%. Repayment periods range from 24 to 60 months. Example loan: four-year $20,000 loan with an origination fee of 8.99%, a rate of 15.49%, and corresponding APR of 20.77%, would have an estimated monthly payment of $561.60 and a total cost of $26,966.26. To qualify for a 8.99% APR loan, a borrower will need excellent credit, a loan amount less than $12,000.00, and a term of 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to pay off qualifying existing debt directly; or showing proof of sufficient retirement savings, could help you also qualify for lower rates. Loan Consultants for Achieve Personal Loans are available Monday-Friday 6 AM to 8 PM AZ time, and Saturday-Sunday 7 AM to 5 PM AZ time.

Home Equity loans are available through our affiliate Achieve Loans (NMLS ID #1810501). Equal Housing Opportunity. Offers may vary and all loan requests are subject to eligibility requirements, application review, loan amount, loan term, income verification, and lender approval. Product terms are subject to change at any time. Offers are a line of credit. Loans are not available to residents of all states and available loan terms/fees may vary by state where offered. Line amounts are between $15,000 and $300,000 and are assigned based on product type, debt-to-income ratio and combined loan-to-value ratio. 10, 15, 20, and 30-year terms available. Minimum 600 credit score applies for debt consolidation requests (20 and 30 year terms require a minimum credit score of 640), minimum 700 applies for cash out requests. Other terms, conditions and restrictions apply. Fixed rate APRs range from 6.74% - 14.75% and are assigned based on underwriting requirements and offer APRs assume automatic payment enrollment which may provide a discount (autopay enrollment is not a condition of loan approval). All terms have a 5-year draw period with the remaining term being a no draw period. Payments are fully amortized during each period and determined on the outstanding principal balance each month. Closing fees range from $750 to $6,685, depending on line amount and state law requirements and typically include origination (3.5% of line amount) and underwriting ($725) fees if allowed by law. Property must be owner-occupied. Combined loan-to-value ratio may not exceed 80% (20 and 30 year debt consolidation requests may not exceed 75%), including the new loan request. Property insurance is required and flood insurance may be required if the subject property is located in a flood zone. You must pledge your home as collateral. Loan funding time is dependent on full application and documentation submission, average funding time is 11 business days for 2025, including rescission. Monthly/yearly savings claim is based on average monthly debt savings from originated loans for Q4 2024. Monthly/yearly savings varies based on each loan situation and can be more or less than $800/$10,000. Requirements to obtain 6.74% APR include: debt to income ratio <=15%; cumulative loan to value <= 50%, including new request; loan amount between $15,000 and $150,000; term of 10 years; FICO of 800+; and automatic payment enrollment. Contact Achieve Loans for further details

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