Comparison: Home Equity Loan and Home Equity Line of Credit

By Scott Adams

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

What You GetRevolving credit, with a specific credit limit of up to 100 percent of the value of your home (its value minus all debts against it). Some lenders will allow you to borrow up to 125 percent of the value of your home.

A fixed amount of money, up to 100 percent of your equity in your home (its value minus your first mortgage debt and other debts). Some lenders will allow you to borrow up to 125 percent of the value of your home.

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

How To QualifyYou typically need to provide proof of your income, home ownership, your mortgage and how much equity you have in your home. An appraisal is usually required as well.

You typically need to provide proof of your income and home ownership, and proof that at least 20 percent of the value of your home is paid off. An appraisal is usually required as well.

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

How  To RepayMinimum payments (possible as interest only) every month; ultimately you have to repay the entire amount borrowed along with interest.

Fixed payments of interest and principal over a set period of time.

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

How  long it lasts

You have a 10 to 20-year period which you can withdraw from the line (up to the credit limit), after which you have a fixed period to pay back the outstanding balance plus interest.

The term of the loan can be as short as a year or up to 30 years.

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

CostsUsually no closing costs, but may range from $150 to $800 and have an annual fee and non usage fee.

Usually no closing costs, but may range from $150 to $800 which is lower than a first mortgage.

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

How you receive the funds

You draw funds as needed, typically using special checks or a credit card

You receive one up-front lump sum

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

Interest rateThe prime interest rate plus a margin (which can vary from one institution to another).

Fixed or adjustable rate

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

TaxesInterest may be tax-deductible (consult with a tax advisor).

Interest may be tax-deductible (consult with a tax advisor).

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

Which is suited for me

Those who need access to funds now and in the future and want the flexibility to use your credit any time

Those who need a specific amount for an immediate need and want to receive all of your funds up-front and/or prefer to always pay your loan in fixed payments over a fixed period of time.

 

Home Equity Line of Credit (HELOC) | Home Equity Loan (HEL)

  HELOC   HEL

Where do I apply

Apply with your local bank or click the website below www.OnlineHomeEquity.net

Apply with your local bank or click the website below: www.OnlineHomeEquity.net