Home Equity Loans in Tennessee

What is a home equity loan?

A home equity loan is a second mortgage that lets you borrow a lump sum against your home equity at a fixed interest rate. You receive the full amount at closing and repay it in equal monthly installments over a set term — typically 5 to 30 years.

Unlike a cash-out refinance, a home equity loan doesn't replace your first mortgage. Your original loan stays in place with its existing rate and terms. The home equity loan is a separate, subordinate lien.

When a home equity loan makes sense

• Your first mortgage has a low rate: If you refinanced at 3% and current rates are 7%, a cash-out refi would replace your low-rate loan with a higher-rate one. A home equity loan lets you access equity without touching your first mortgage.
• You need a specific lump sum: Home improvements with a known cost, debt payoff, or a one-time expense are good fits for the fixed structure of a home equity loan.
• You want payment predictability: Fixed rate and fixed payment make budgeting straightforward. Unlike a HELOC, there's no variable rate risk.

LTV limits and qualification

Most lenders allow a combined LTV (first mortgage + home equity loan) of 80–90% of the home's appraised value. Qualification requires a credit review, income verification, and typically an appraisal. Minimum credit scores are generally 620–680.

Home equity loan vs. HELOC

Both are second mortgages, but they work differently:

• Home equity loan: Fixed rate, lump sum, fixed payment. Best for known, one-time expenses.
• HELOC: Variable rate, revolving credit line, flexible draws. Best for ongoing or uncertain expenses.