Home equity
Home equity loan
A fixed-rate second mortgage that gives you a lump sum against your home's equity, repaid in equal monthly payments over a set term.
What does home equity loan mean?
A home equity loan is the fixed, one-and-done cousin of the HELOC: you receive a lump sum and repay it at a fixed rate with predictable payments. Because it sits behind your first mortgage, it lets you tap equity without refinancing — valuable in Michigan when your first-mortgage rate is well below today's.
Lenders typically want you to keep 15–20% equity after the loan. For a defined cost like a renovation or debt consolidation, its payment certainty often beats a variable HELOC, and it usually beats a cash-out refinance when it would reset a low first-mortgage rate.
A Michigan example
An owner with a home worth $285,000 and a low first-mortgage rate wants a fixed sum for a renovation. A home equity loan draws on that equity at a fixed rate while leaving the low first mortgage completely intact.
Common questions
How much can I borrow with a home equity loan?
Usually up to 80–90% combined loan-to-value — your first mortgage plus the new loan, divided by the home's value. The rest stays as your equity cushion.
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