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Home Equity Types
Explanation:
When it comes to using your home value for financing purposes, you can use either a home equity loan or a home equity line of credit (HELOC).
Both home equity loans and home equity lines of credit allow you to leverage the value of your house as a means of accessing credit at a low cost. One of the key differences between them lies in the fact that a home equity loan gives you access to a set amount of money, while a HELOC allows you to access money when and if you need it, up to a certain credit limit. The other main difference is that home equity loans usually have fixed interest rates, whereas HELOCs usually have variable interest rates, which means their interest rates change based on the Prime Rate or the Libor Rate.