A home equity loan is a type of loan that allows a borrower to use his/her home as security for the loan. These loans are often used for home improvement or other large expenses.
In order to apply for a home equity loan, a good credit history is often required. There are two types of home equity loans: a home equity line of credit (HELOC) and a home equity term.The difference between a HELOC and a home equity term is that a HELOC has revolving credit with a changeable interest rate. A home equity term is paid all at once and customarily has a fixed interest rate. Both of these loans are considered to be second mortgages. While you can use a home equity loan to refinance, it cannot be used to purchase another home.