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Home equity loans are basically the same as a mortgage though they are generally structured as a credit line secured against a portion of the appraised value of your home. The term "second mortgage" is used interchangably. Example: You have a home that is appraised at a value of $100,000 and have a mortgage loan of $80,000. That leaves you with $20,000 of equity in your home. Some of that $20,000 could be used as collateral for a home equity loan. An advantage of a home equity loan is that you may be able to deduct the interest paid on the loan on top of the deductible interest from your primary mortgage.
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Home equity loans allow a homeowner to borrow money by pledging the house as collateral. Borrowers who want to borrow a relatively large amount of money or who don’t have good credit often find the home equity loan to be attractive.
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