A home equity loan allows a homeowner to borrow money using their property as security. In determining the amount of the loan, lenders will evaluate the equity--the difference between the appraised value of the home and what the borrower still owes on it--along with the homeowner's credit rating and history of mortgage payments.

Home equity loans are a popular way to borrow money to pay outstanding credit card or health care debts, to finance a child's education, or undertake large home-improvement projects. The most common home equity loans are so-called closed end loans: the borrower receives a lump sum at the time of closing, with interest set at either a fixed or at an adjustable rate, depending on the agreement with the lender.

These closed end loans are not the same as a home equity line of credit (HELOC), where the borrower establishes a home equity account and draws funds when needed. HELOCs can be useful when you need money over time, rather than all at once.  Interest accrues only on money that is withdrawn.  Interest is not charged on the unused portion of the credit line.  

Whether you need a home equity loan or a hone equity line of credit, in many cases the interest is tax deductible.  Please check with your tax advisor.