Home Equity Loan Defined
A home equity loan is a type of loan in which the borrower uses the equity in his home as collateral . Home equity loans are sometimes useful for families to help them finance major home repairs, medical bills, and even college educations.

Closed End Home Equity Loan
The borrower receives a lump sum at the time of the closing and cannot borrow further. The maximum amount of money that can be borrowed is determined by various variables, including credit history, income, and the appraised value of the collateral, (among other factors). It is very common to be able to borrow up to 100% of the appraised value of the home, less any liens, although there are lenders that will go above 100% when doing over-equity loans .

Closed-end home equity loans generally have fixed rates and can be amortized for periods usually up to 15 years. Some home equity loans offer reduced amortization whereby at the end of the term, a balloon payment is due. These larger lump-sum payments can be avoided by paying above the minimum payment or refinancing the loan.

Open End Home Equity Loan
This is a revolving credit loan where the borrower can choose when and how often to borrow against the equity in the property. Like the closed end loan, it may be possible to borrow up to 100% of the value of a home, less any liens. These lines of credit are available up to 30 years at a competitive variable interest rate . The minimum monthly payment can be as low as only the interest that is due.

Both are usually referred to as second mortgages , because they are secured against the value of the property, just like a traditional mortgage. Home equity loans and lines of credit are usually for a shorter term than first mortgages. Some people are able to deduct home equity loan interest on their personal income taxes.

Ownership Equity
In finance and accounting , ownership equity , commonly known simply as equity , but also as risk capital or liable capital , is the difference in value between the assets and the claims on them (liabilities), which accrues to the owner(s). In case the owners are shareholders , it is usually called shareholders' equity .

In a bankruptcy court, creditors have the first claim on assets, and ownership equity is the last or residual claim against assets, paid only after all other creditors are paid.

For example, in real estate the owner's equity in a property is the difference between the market price of a property and the owner's mortgage debt.

Equity can be a source of assets, either through contributed capital (the contribution of capital resources, i.e., assets from the owners) or retained earnings (when the business increases assets through earning activities). These retained earnings can then be distributed to the owners (through equity draws or dividends depending on the corporate structure) or kept in the business.

Rate Locks
Rate locks are a way of protecting you from the rise in interest rates during your loan process. You can lock your rate in with some lenders for as long as 120 days. The one thing you must remember is that with most lenders your rate is protected if rates rise or fall. That means that if the rates improve during your process, you still will get the rate you locked in at. One simple loan application opens the doors to hundreds of loan programs!