Home Equity Loan: A type of loan in which the borrower uses the equity of his or her home as collateral. The loan amount is determined by the value of the property, and the value of the property is determined by an appraiser from the lending institution. Home equity loans are often used to finance major expenses such as home repairs, medical bills, or debt consolidation. A home equity loan creates a lien against the borrower’s house and reduces actual home equity.
