There is a specific difference between a home equity loan and a home equity line of credit. A HELOC is a line of revolving credit with an adjustable interest rate whereas a home equity loan is a onetime lump-sum. With a HELOC the borrower can choose when and how often to borrow against the equity in the property, with the lender setting an initial limit to the credit line based on criteria similar to those used for closed-end loans. Like the closed-end loan, it may be possible to borrow up to an amount equal to the value of the home.
- The part of the home that you own is represented by the equity which builds up each time you make a payment.
- A home equity loan allows you to take out usually up to 80 percent of the equity in your home as a lump sum, which can be used to make repairs or improvements to your home.
- Interest rates on home equity loans are higher than the ones on conventional mortgage loans, but usually lower than the ones on other types of loans.
Alliance Credit Counseling
8000 Corporate Center Dr Suite 114
Charlotte, NC 28226
(888-995-7856) / (704-341-1010)