A Home Equity Loan is a type of loan that allows homeowners to borrow money by using the equity in their home as collateral. Equity is the difference between the current market value of the home and the amount still owed on the mortgage. This loan typically has a fixed interest rate and is paid back in monthly installments over a set period. Homeowners often use Home Equity Loans for major expenses, such as home renovations, education costs, or debt consolidation. Since the loan is secured by the home, it usually offers lower interest rates compared to unsecured loans. However, failing to repay the loan can result in losing the home.