Home Equity Loans
Put Your Home’s
Equity to Use
When it comes to tapping into the equity in your home, you have two primary choices: home equity loans and home equity lines of credit (HELOCs). Both of these loan types allow you to use your home as collateral, but they have distinct features and payment structures. We'll help you explore the differences between these home equity lending options. If you have more questions, please contact our office to speak with our lending team.
Home Equity Loans vs. HELOCs
| Home Equity Loan | HELOC (Home Equity Line of Credit) | |
|---|---|---|
| What is it? | A fixed-term loan based on home equity. | A revolving credit line secured by home equity. |
| How does it work? | Lump sum upfront, fixed interest rate, equal payments. | Maximum credit limit, borrow as needed, variable rate. |
| Best Suited For | Borrowers who need a specific amount of money for a one-time expense (e.g., home renovations, debt consolidation, or major purchases). Ideal for those who prefer predictable payments and a fixed interest rate. | Borrowers who want flexibility. HELOCs are great for ongoing expenses (e.g., home improvements, education costs, or emergencies). You can access funds when necessary and only pay interest on what you use. |
| Risk Consideration | Collateral risk (home). Failing to repay the loan could result in losing your home. | Be cautious not to overextend yourself. HELOCs can lead to excessive debt if not managed wisely. |
Choosing Between Home Equity Loans & HELOCs
- Evaluate Your Needs: Consider whether you need a lump sum (home equity loan) or ongoing access (HELOC).
- Assess Your Risk Tolerance: Fixed payments (home equity loan) provide stability, while variable rates (HELOC) offer flexibility.
- Speak to a Financial Advisor: Discuss your specific situation with a professional to make an informed decision.