Because the market value of homes may decline, lenders do not like to lend the full amount of the equity when extending a home equity loan.

Question

Quizplus · Accepted Answer

Lenders typically do not lend the full amount of the equity in a home for a home equity loan because they need to mitigate their risk in case the market value of the home declines, leaving them with insufficient collateral to cover the loan amount.

Because the Market Value of Homes May Decline, Lenders Do