Home equity loans and HELOCs are commonly called a second mortgage.
According to Business Insider, they allow you to borrow against the value of your home.
Why would you want to do that? Perhaps to pay for remodeling projects or to consolidate high-interest debts.
Home equity loans come with a fixed interest rate, fixed monthly payment, and fixed repayment timeline.
This makes them a predictable option for borrowers who don't like surprises.
HELOCs, on the other hand, come with variable rates and let you borrow as you need. They're a revolving line of credit.
In fact, they function a lot like a credit card, the main difference being that you're using your home as collateral.