Do You Need a Home Equity Loan or Line of Credit?
Using the equity from your home is a great way to pay for home improvements, fund your child’s education, or get your family out of debt. So what do you do when you want to apply for a home equity loan. Here are some tips and suggestions that may help you find the right product for you, so that you can balance the responsibilities of being a homeowner and get the funds you need for every area of your life.
One major choice you have to make is whether to take a Loan or Line of Credit. A home equity loan is a fixed loan with fixed number of payments. So this loan will be paid off in the predetermined time period. Also you will receive the entire amount of the loan at the closing.
A home equity line of credit (HELOC) is an open line functioning like a credit card. You will open a line and be able to draw on that account whenever you need to and only owe the interest and princpal on what you borrowed. So if you have a $20,000 line of credit and only use $10,000 you only have to pay back that $10,000.
The choice is up to you whether you need all the cash up front or want the available credit later on down the line.
