While a home equity loan and a home equity line of credit (HELOC) may seem interchangeable, they’re actually different from one another.
With the home equity loan, you must decide how much you want to borrow at closing and then make monthly payments, similar to a mortgage.
On the other hand, the HELOC offers you borrowing potential. More like a credit card, a HELOC allows you to borrow up to a certain amount and then carry the debt, or pay it off and re-borrow as you need.
If you’re considering a home equity loan, make sure you know the pros and cons before you sign on the dotted line.
Advantages of a home equity loan
Here are reasons to get a home equity loan: