Home Equity Loans
Tap into the equity you’ve built to fund renovations, consolidate debt, or cover major expenses —
often at rates lower than credit cards or personal loans.
Your home has been working for you. Now it’s time to put that equity to work.
What Is a Home Equity Loan?
A home equity loan lets you borrow against the equity you’ve built in your home — the difference between what your home is worth and what you still owe on your mortgage. You receive a lump sum with a fixed interest rate and predictable monthly payments, making it easy to budget.
Home equity loans are sometimes called “second mortgages” because they sit behind your primary mortgage. They’re a powerful financial tool for homeowners who need access to significant funds without touching their existing first mortgage rate.
Who Is This Best For?
Home equity loans are ideal for homeowners who have built substantial equity and need funds for a specific purpose — home improvements, debt consolidation, education expenses, or other large costs. They’re especially attractive right now for homeowners who locked in a low first mortgage rate and don’t want to refinance.
If you’ve been in your home for several years and property values have risen in your area, you likely have more equity than you think. A quick conversation can help you understand exactly how much is available.
What You’ll Need to Qualify
- Equity: At least 15-20% equity in your home after the new loan
- Credit score: Typically 620+ (better scores get better rates)
- Debt-to-income ratio: Generally 43% or below including both mortgage payments
- Income: Stable, verifiable income to support the additional payment
- Appraisal: Current appraisal to determine your home’s market value
Most lenders allow you to borrow up to 80-85% of your home’s value (combined with your first mortgage). Some programs go higher. The interest on a home equity loan may be tax-deductible if the funds are used for home improvements — consult your tax advisor for specifics.
Key Advantages of Home Equity Loans
Fixed Rate & Predictable Payments
Unlike HELOCs, a home equity loan gives you a fixed rate from day one. Your payment stays the same for the life of the loan — no surprises, no adjustments.
Keep Your Low First Mortgage Rate
If you locked in a great rate on your first mortgage, a home equity loan lets you access cash without refinancing and losing that rate. This is a huge advantage in today’s rate environment.
Lower Rates Than Alternatives
Because the loan is secured by your home, rates are typically much lower than credit cards, personal loans, or other unsecured borrowing options.
Potential Tax Benefits
Interest paid on home equity loans used for home improvements may be tax-deductible. This can effectively lower your borrowing cost even further. Consult your tax advisor for details.
Common Questions About Home Equity Loans
What’s the difference between a home equity loan and a HELOC?
A home equity loan gives you a lump sum with a fixed rate and fixed payments. A HELOC (Home Equity Line of Credit) works like a credit card — you draw funds as needed during a draw period, usually with a variable rate. Each has its advantages depending on your needs.
How much equity can I borrow?
Most programs allow a combined loan-to-value (CLTV) of up to 80-85%. So if your home is worth $600,000 and you owe $300,000 on your first mortgage, you could potentially borrow up to $180,000-$210,000 through a home equity loan.
Will this affect my first mortgage?
No — your first mortgage stays exactly as it is. A home equity loan is a separate, additional loan. Your original rate, term, and payment don’t change. This is one of the biggest advantages over a cash-out refinance.
How long does it take to close?
Home equity loans typically close in 2-4 weeks, depending on the lender and appraisal timeline. Having your documentation ready upfront helps speed things along considerably.
Let’s Unlock Your Home’s Equity
No pressure. No obligation. Just clarity.
Most people start with a quick call — it makes everything easier.
Garry McDonald | NMLS #1922072 | DRE# 01781703 | (949) 534-6686