What is a home equity loan primarily secured by?

A home equity loan is primarily secured by the equity in the borrower's home. Equity refers to the difference between the current market value of the home and the outstanding mortgage balance. When a homeowner takes out a home equity loan, they are essentially borrowing against this equity, which serves as collateral for the loan. This means that if the borrower fails to repay the loan, the lender has the right to take possession of the home through foreclosure to recover the owed amount.

By securing the loan with the property itself, lenders can offer lower interest rates compared to unsecured loans, as the risk to the lender is mitigated by the value of the home. This understanding of home equity loans highlights the importance of maintaining or increasing home value for borrowers who plan to utilize such financial products.

The other options do not represent what secures a home equity loan. Personal credit history is important for determining loan eligibility and interest rates but is not the primary collateral. The bank account balance, while a financial asset, does not directly link to a home equity loan since it does not involve property collateral. Government bonds are also an unrelated asset and do not provide security for a home equity loan.