Home Equity Loan (HELOAN) — A Fixed Payment, One Lump Sum
Borrow a set amount against your home's equity and repay it on a predictable schedule, without touching your existing first mortgage.
A home equity loan, often called a HELOAN, lets you borrow a fixed amount against the equity in your home and repay it in equal installments over a set number of years. You receive the money as one lump sum, the interest rate is typically fixed, and your first mortgage stays exactly as it is. For homeowners who know how much they need and want a payment that never changes, that predictability is the main appeal.
Christopher Hovenier helps homeowners in Arizona, California, Colorado, Florida, Idaho, Michigan, New Mexico, Tennessee, Texas and Virginia compare a home equity loan with the other ways to tap equity, so you choose the structure that fits the goal rather than the first product you hear about.
How a Home Equity Loan Works
- It sits behind your first mortgage. It is a second loan, so the first mortgage and its rate are untouched.
- You get one lump sum. There is no credit line to draw from later, so the amount is set at closing.
- You repay on a fixed schedule. Payments are usually the same each month for the life of the loan, with each payment covering principal and interest.
- Your home is the collateral. That is what keeps the rate lower than most unsecured debt, and it is also the risk.
Home Equity Loan vs. HELOC
The two are closely related but behave differently. A home equity loan pays out once and has a predictable payment. A HELOC works more like a credit card secured by your home: you draw what you need, when you need it, usually at a variable rate. If you have a single defined expense, such as a remodel with a known price, the fixed payment of a HELOAN can be easier to plan around. If costs will arrive over time, a HELOC may fit better. For borrowers who would rather replace the whole mortgage, a cash-out refinance is the third path, and our home equity comparison guide covers all of them.
Common Uses
- Debt payoff. Replacing credit card or personal loan balances with one fixed payment. Read the risks first in our guide to paying off debt with home equity.
- Home improvement. A kitchen, roof, addition or repair with a defined cost.
- Large one-time expenses. Education, medical bills, a wedding, or a family need.
- Keeping a low first-mortgage rate. Borrowing without giving up the mortgage you already have.
What Lenders Look At
- Your home's value and the total of all loans against it
- Remaining equity, since lenders generally limit how much of the home's value can be borrowed against
- Credit history and score
- Income, employment and debt-to-income ratio
- Property type and how the home is used
Trade-Offs to Weigh
- Two payments. You keep your first mortgage payment and add a second one.
- Closing costs. They vary by lender and loan size, so compare the total cost of the loan and not only the monthly payment.
- Your home is at risk. If you fall behind, the lender can foreclose, even if the original reason for borrowing was to ease a budget squeeze.
- No flexibility after closing. You cannot re-borrow later without a new loan, which is the main thing a HELOC offers that a HELOAN does not.
- Longer terms cost more overall. A smaller payment spread over many years can add up to more interest in total.
Who a Home Equity Loan Is Best For
- Homeowners who know exactly how much they need
- Borrowers who value a payment that stays the same
- Owners who want to keep the interest rate on their existing first mortgage
- Homeowners who are comfortable carrying two monthly payments
Where We Offer It
Christopher is licensed to help homeowners in Arizona, California, Colorado, Florida, Idaho, Michigan, New Mexico, Tennessee, Texas, and Virginia. Terms and eligibility vary by state, property and borrower, so call or send a request and he will tell you what is realistic for your home.
Frequently Asked Questions
What does HELOAN mean?
HELOAN is short for home equity loan. It is a loan secured by your home that pays you a single lump sum, which you repay in fixed installments over a set term, usually on top of your existing first mortgage.
What is the difference between a home equity loan and a HELOC?
A home equity loan gives you the full amount at once with a predictable payment, while a HELOC is a revolving line of credit you draw from as needed, usually with a variable rate. A HELOAN suits a single, known expense, and a HELOC suits ongoing or uncertain costs.
Will I keep my current mortgage with a home equity loan?
Yes. A home equity loan is a separate second loan, so your first mortgage and its rate stay in place. You will have two monthly payments instead of one.
Is the rate on a home equity loan fixed?
Home equity loans typically have a fixed interest rate and a fixed repayment term, which makes the payment predictable. Exact terms vary by lender and borrower.
Can I use a home equity loan to consolidate debt?
Many homeowners do, since the rate is often lower than credit cards charge. The trade-off is that you convert unsecured debt into debt secured by your home, so it only makes sense if you can comfortably make the payments. See our guide to using home equity to pay off debt for the full picture.
Which states do you offer home equity loans in?
Christopher is licensed in Arizona, California, Colorado, Florida, Idaho, Michigan, New Mexico, Tennessee, Texas and Virginia. Availability varies by state and property, so call to confirm what applies to your home.
Home equity products are secured by your home. If you cannot repay the loan, you could lose your home. Availability, terms and eligibility vary by state, property and borrower, and all loans are subject to credit and underwriting approval. This is not a commitment to lend. Christopher Hovenier, NMLS #1404324, E Mortgage Capital, Inc. NMLS #1416824.
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