Home equity loan
A lump-sum second loan against home equity, with fixed payments and usually a fixed rate. Sometimes called a second mortgage.
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Where this comes up: getting ready
Part 1 of 4
Why a seller cares
A home equity loan is a second mortgage, and it is paid off at closing right after the first. Its balance is part of your payoff and comes off your proceeds, which surprises sellers who only think of the first loan.
Part 2 of 4
A simple example
First mortgage $180,000, home equity loan $30,000. Your total payoff at closing is about $210,000 plus interest to the day.
| The loan | At closing |
|---|---|
| First mortgage, $180,000 | Paid first from the buyer's funds |
| Home equity loan, $30,000 | Paid next; its lien is released after the first |
| What is left | Your proceeds, after fees |
Every loan on the house is paid from the sale, in the order it was recorded.
Part 3 of 4
What people get wrong
That the second loan can stay in place after the sale. Every lien has to be paid or released before title passes clean.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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