Home Equity Loan Definition
A home equity loan is similar to a home equity line of credit in many ways. It is technically a type of second mortgage, but rather than giving you a line of credit on which to draw, the lender provides you with a lump sum of cash. Home equity loans do require that you immediately begin making payments on them but can be viable alternatives to lines of credit or reverse mortgages. However, they often come with higher interest rates and, because they provide a lump sum payment, can be more expensive than home equity lines of credit.