 TITLE: How Does a Home Equity Loan Work? CONTENT: What Is a Home Equity Loan?\n---------------------------\nSometimes called a second mortgage, a home equity loan is a lump sum of money you borrow against the equity in your home. Just as your first mortgage is secured by the property, so is the home equity loan.\nEquity is the current market value of your home minus the amount you owe on your mortgage. It grows as you pay down your mortgage and as your home increases in value. For example, a home you originally purchased for $225,000 may now be worth $300,000. Time, increasing home values in your area and other factors have added $75,000 to your home's equity. If you've paid down your mortgage by $25,000, you have an additional $25,000 in equity—or $100,000 total.\nMost lenders will let you borrow between 75% and 85% of your home's equity. So if you have $100,000 in equity, $75,000 to $85,000 may be available to you.\nHome equity loans are fixed-rate loans, meaning your loan has a fixed interest rate that won't change and you'll repay it in fixed monthly installments. Terms typically range from five to 30 years. END