Home Equity Loan vs Line Of Credit
Ever wonder what the difference is between a home equity loan vs line of credit? There are so many different kinds of loans it can get confusing.
Lets look at the difference so you can get a better understanding of what works best for you.
Home equity lines have experienced unprecedented growth in the past two years and presently represent about 80 percent of the home equity market.
A home equity line of credit has a variable interest rate and works like a credit card. You get a pre-determined loan amount that is secured by your home.
Most come with checks and credit cards that you can use to draw on as you need the money.
Most lenders just require an interest only payment for either 10 or 15 years. After that the loan must be paid in full. The reality is most people will sell their home and pay the loan off before it actually comes due. If you decide you want to stay in your home, you could always refinance.
It's important to remember, a home equity line of credit is based on varible interest rates. These varible rates will cause your payment to change as the interest rates move up or down.
A home equity loan, on the other hand, has a fixed interest rate with fixed monthly payments. These loans are considered a standard second loan on your home. Like a home equity line, these loans are also secured by your home.
You borrow a certain amount of money for a specific period and get the whole sum at the close of the loan. The payments a on home equity loan are typically based on 10 to 15 years and are level monthly payments.
People who aren't comfortable with an adjustable or variable rate payment tend to favor a home equity loan vs line of credit. As interest rates rise, home equity loans become more popular.
Home equity loans will have higher starting interest rates because they are fixed. Varible rate loans usually start off with lower interest rates. But if interest rates are rising, a variable rate could catch up or even go higher than what the fixed rate is.
Now that you know the difference between a home equity loan vs line of credit you can decide which one works the best for your needs.
The #1 Credit Restoration Course In America Credit Secrets Bible
Regardless of your current credit situation
