Home Equity Loan, also known as a ‘second mortgage’ is a type of loan whereby the borrower uses the market value (equity) of their home as a leverage or collateral. This type of loan is often taken out to finance major expenses such as medical bills and home repairs.
Home equity loans come in two types: home equity term, which is a fixed term, and home equity line of credit which is variable and are usually though not always, for a shorter term than the original mortgage.
Fixed-Rate Loan
Is a single, one time, lump-sum loan, which is paid back over a specified period of time with a set interest rate. The payment and interest rate remain the same over the lifetime of the loan.

Home-Equity Lines of Credit
A home-equity line of credit known as the HELOC is a line of revolving credit with flexible interest rates that change throughout the loan period. It actually works like a credit card and, some credit providers even offer one.

Both types of loans are generally payable within the range of 5 to 15 years. Furthermore, both types of loans must be repaid in full if the home on which they are borrowed is sold.

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