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What is a home equity loan?

A home equity loan allows you to tap into your home's equity, which is the difference between the amount your home is worth and the amount that you still owe.

Homeowners often use a home equity loan for home improvements, to pay for a new car, or to finance their child's college education.

Because the loan is secured by your home’s equity, if you default, the bank may foreclose on your house and take ownership of it.

This type of loan is sometimes referred to as a second mortgage or borrowing against your home.

Refer to 12 CFR 1026 "Truth in Lending (Regulation Z)."

Last Reviewed: April 2021

Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on should not be construed as legal advice or a legal opinion of the OCC.

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