A home equity loan 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 amount still owed on the mortgage. These loans typically have fixed interest rates and are paid back over a set period, making them a predictable option for financing. Home equity loans can be used for various purposes, such as home improvements, debt consolidation, or major expenses. However, it's important to remember that failing to repay the loan could result in losing the home, as it serves as security for the borrowed amount.