Home Equity Loan vs. Home Equity Line of Credit (HELOC)
A home equity loan is a second mortgage. You receive a lump sum and can spend up to that pre-determined amount. This amount is based on your income, your credit background, and the amount outstanding on your mortgage. These loans feature fixed or adjustable rates and typically have longer terms over a set period.
On the other hand, a home equity line of credit (HELOC) is similar to a credit card. Assuming you pay off your balance, you can repeatedly spend up to the limit. HELOCs often have lower interest rates than credit cards and can potentially have tax deductible interest. |