Home Equity Line question

[ADisneygirl]

Hey, any bankers or money management experts here? Does anyone on here know the difference between a home equity line of credit and a home equity loan? If you are looking to consolidate bills, which would be better to apply for?

 

[LadyyRedd]

I'm not a banker or money expert (unless it's spending! ), but I believe the difference between the line of credit (HELOC) and the loan is that a HELOC is like a credit card in that, when you make payments on it, you will have "available credit" from which to take money out again, but a loan, once you repay, your balance just gets smaller and you can't take money out again (like a car loan). I think, also, that on a HELOC, your rate is variable, but with a loan, you lock in a fixed rate. I could be mistaken on that last part.

Kimya

 

[lsyorke]

A home equity line of credit is a variable rate loan. you are approved up to a certain amount (based on the equity in your home) and can write checks on that account. You pay interest on the amount that you actually have taken. You can write checks up to the approved amount.

A home equity loan is a set amount of money and usually a fixed rate loan. You get the money in a lump sum and pay a fixed payment every month.

I would not do a line of credit these days since the interest rates are going up all the time. We just converted from a line of credit to a fixed loan this week to lock in the interest rate.

 

[ADisneygirl]

Thanks for the helpful info.