new home purchase mortgage loans or cash out home equity refinancing for debt consolidation and home improvement remodeling loans financing

A home equity loan, sometimes called a "term" loan, is a one-time lump sum that is paid off over a set amount of time, with a fixed interest rate and the same payments each month. Once you get the money, you cannot borrow further from the loan. Sometimes, home equity loans are compared to "Home Equity Line of Credit" loans (HELOC). A HELOC works more like a credit card. You are allowed to borrow up to a certain limit for the life of the loan. The time limit is set by the lender.

There are two types of home equity loans: term, or closed-end loans, and lines of credit. Both are sometimes referred to as second mortgages, because they're secured by your property, just like the original (first) mortgage. Often, home equity loans and lines of credit are for a shorter term than first mortgage loans. The most common type of mortgage runs 30 years, while home equity loans typically have a life of five to 15 years.

Credit lines may have variable interest rates that fluctuate over the term of the loan. Payments vary depending on interest rates and how much you have drawn against your credit line. When the term of a line of credit has expired, everything must be paid off. Lenders may or may not allow the home equity credit lines to be renewed.