Home Equity Loan Law and Legal Definition

A home equity loan is secured by equity value in the borrower's home. A borrower uses the equity in their home as collateral. A home equity loan is also known as borrowing against a home. A borrower utilizes a home equity loan for multiple purposes, such as consolidation of high-interest debt, home improvement, emergency cash needs, and major expenditures. A home equity loan enables a borrower to knock into home's built-up equity, the difference between the amount at which the home could be sold for and the amount which is still owed. The interest paid in a loan is usually tax-deductible. The creditor bank can foreclose on the home and can take ownership of the home.