Home equity loan rates

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A home equity loan allows homeowners to access the equity in their primary residence without having to sell the property. Equity is the difference between what a home is worth and what is owed against it. Traditionally, home equity loans were called second and third mortgages.

Equity in a home comes from two sources. Mortgage payments, over a period of time, reduce the amount owed against a property, and real estate appreciation increases the gross value. After several years of making mortgage payments, the equity accrued can be substantial. For example, a home purchased for $250,000 with a zero down payment mortgage and appreciating 5% a year may have $50,000 in equity in as little as five years.