Things to Consider When Deciding Between a HELOC and Home Equity Loan
If you're a homeowner with equity in your property, you may be able to tap into that equity by taking out a loan or opening a line of credit. Home equity loans and home equity lines of credit (HELOCs) are two popular options for homeowners looking to borrow against their equity.
There are a few key differences between HELOCs and home equity loans that you should be aware of before making a decision. Here are some things to consider when deciding between a HELOC and home equity loan.
Home Equity Loan:
With a home equity loan, you borrow a lump sum of money and make fixed monthly payments over a fixed term. Home equity loans typically have lower interest rates than HELOCs.
A HELOC is a line of credit that you can borrow against as needed. With a HELOC, you only pay interest on the amount of money you actually borrow. HELOCs typically have variable interest rates.
Both home equity loans and HELOCs can be a good way to access the equity in your home. Which one is right for you will depend on factors like how much money you need to borrow, how soon you need it, and your overall financial picture.