Definition Of Equity Loan

The basic definition of a home equity loan emphasizes its two main elements it s a loan secured by your home in which you tap into the equity you have built up.

Definition of equity loan. Home equity loan definition is a loan based on the amount of equity a person has in his or her home. It can be represented with the accounting equation. Equity can apply to a single asset such as a car or house or to an entire business. A home equity loan is a popular financing option for a variety of homeowners.

A line of credit secured by the equity in the borrower s home it is open ended meaning the borrower may take advances pay down the line to reestablish it and then take advances against it as needed. Home equity loans allow homeowners to borrow against the equity in. Equity definition the quality of being fair or impartial. Equity is measured for accounting purposes by subtracting liabilities from the value of an asset.

Home equity loan synonyms home equity loan pronunciation home equity loan translation english dictionary definition of home equity loan. Generally speaking equity is the value of an asset less the amount of all liabilities on that asset. A home equity loan is a lump sum loan. The equity of solomon.

A home equity loan is a type of loan in which the borrower uses the equity of his or her home as collateral the loan amount is determined by the value of the property and the value of the property is determined by an appraiser from the lending institution. This timeline could be as short as five years or as long as 15 years or more. Usually renewed on an annual basis with adjustable interest rates tied to the lender s prime rate often called a heloc home equity line of credit. For example if someone owns a car worth 9 000 and owes 3 000 on the loan used to buy the car then the difference of 6 000 is equity.

Citation needed home equity loans are often used to finance major expenses such as home repairs medical bills or college education. Assets liabilities equity. With a home equity loan you get all of the money at once and repay in flat monthly installments throughout the life of the loan.