Home Equity Vs. Line of Credit
A Home Equity Loan enables you to access a portion of the available equity in your home in one single payout at a fixed interest rate with fixed monthly payments. This loan can only be used one time, even if you pay back all money borrowed before the end of your loan term.
A Home Equity Line Of Credit (HELOC) acts similar to a credit card. However, instead of borrowing money from a credit card company, you are borrowing money from the available equity in your home. Your house will be used as collateral if you fail to pay back money borrowed. Interest rates for a HELOC vary month to month. Since a HELOC is tax deductible, you may be able to make up losses from interest through tax write-offs.
A home equity loan is right for you if:
- You have an immediate financial need
- You prefer fixed loan payments during a fixed loan term
- You don’t need to utilize your equity in future financial situations
A HELOC is right for you if:
- You would like current and future access to your equity
- You can balance a fluctuating interest rate