HOME LOAN MATTERS · GUIDE
HELOC vs. home equity loan: what changes?
Both use your home as collateral. The main difference is how you receive the money and repay it.
A line of credit or a lump sum
A HELOC generally allows repeated borrowing during a draw period, up to a limit. A home equity loan usually provides a lump sum. HELOC rates are commonly variable; home equity loans commonly have fixed rates.
Questions to bring to a lender
- What happens to payments when the draw period ends?
- Can the rate change, and what are its limits?
- Are there annual, closing, or early-closure fees?
- How does an existing mortgage or HELOC affect the available amount?
Keep the whole payment in view
An existing first mortgage still needs to be paid. Consider the combined payment and a scenario where a variable rate rises. Neither product is free money: missed payments can put your home at risk.
Use the home equity calculator to explore illustrative borrowing room. It does not predict lender approval.
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