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.
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.
Is the payment fixed?
Yes — you get a lump sum and repay it at a fixed rate with equal monthly payments, unlike a variable HELOC. That predictability suits a one-time expense.
Home equity loan or cash-out refinance?
If your first-mortgage rate is low, the home equity loan usually wins — it leaves that rate untouched, while a cash-out refinance replaces the whole first mortgage at today's rate.
Related terms