Get our app
Account Sign up Sign in

Don't Do Your Taxes™ - Let Us Do Them for You

Get matched with a tax pro who knows what you need, whether filing personal, self-employed or business taxes.

  • A home equity loan allows you to borrow against the value of your home when you refinance your  mortgage.
  • If you itemize, you can deduct the interest on your home equity loan or line of credit.
  • Because you're borrowing against the value of your home, failure to make loan payments could cost you your home.

You can borrow money against the value of your home with a home equity loan or a home equity line of credit. Both are secured with a second mortgage.

A home equity loan is usually distributed in 1 lump sum, and its rate is fixed for the entire term of the loan. A home equity line of credit can be accessed at your discretion. Unlike a home equity loan, the rate for a home  equity line of credit fluctuates based on an index and often converts to fixed rates after a predetermined period of time.

Both provide access of up to 100% or more of the equity in your home.

Tax Advantages

The annual interest charges on a home equity loan or credit line may be fully deductible if you itemize your deductions, an important factor that distinguishes these loans from other forms of consumer credit. Because the collateral for the loan or credit line is your home, interest rates are significantly lower than other consumer loans or credit cards.

Potential Risks

When considering this type of loan, remember that your house is the collateral. Failure to repay can cost you your home. Also, think carefully about the items you plan to buy with your loan or credit line. Depending on the equity you have in your home and its market value, your financial institution may make as much as $100,000 available to you. If tempted to overspend, a home equity loan with a lower, set amount may be better than a flexible line of credit. 

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

Ask a lawyer

Our network attorneys are here for you.
Characters remaining: 600
Rocket Lawyer Network Attorneys

Try Rocket Lawyer FREE for 7 days

Start your Premium Membership now and get legal services you can trust at prices you can afford. You’ll get:

All the legal documents you need—customize, share, print & more

Unlimited electronic signatures with RocketSign®

Ask a lawyer questions or have them review your document

Dispute protection on all your contracts with Document Defense®

30-minute phone call with a lawyer about any new issue

Discounts! Incorporate for FREE + hire a lawyer with up to 40% off*

*Free incorporation for new members only and excludes state fees. Lawyer must be part of our nationwide network to receive discount.