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 home's current market value and the outstanding mortgage balance. Homeowners can typically borrow a percentage of this equity, which can be used for various purposes, such as home improvements, debt consolidation, or major expenses. These loans usually come with fixed interest rates and are repaid over a set term, often ranging from 5 to 30 years. Since the loan is secured by the home, failure to repay can result in foreclosure, making it essential for borrowers to understand their financial situation before proceeding.