Home Equity Loan vs Home Equity Line of Credit (HELOC) | Sterling State Bank
Home equity is the part of your home that you own outright. In other words, it is the difference between the appraised value and any outstanding mortgage balances(s).
There are a couple different ways you can tap into that equity to use for helpful things like home renovations, sending a kid to college, an unplanned medical expense, or just getting debt taken care of. So how do you know which one is right for you?
What is a Home Equity Loan?
A HOME EQUITY LOAN provides you with a one-time lump sum cash amount. You repay it as you would any other installment loan in fixed monthly payments. These fixed-rate loans guarantee that your rate will never change and your payment will never increase. Once you get the money, you cannot borrow further from that loan.
What is a Home Equity Line of Credit (HELOC)?
A HOME EQUITY LINE OF CREDIT establishes a maximum line of credit that you can draw against by simply writing a check. You borrow what you need when you need it. As you repay your principal, that money becomes available to borrow over and over again. That means you don't have to reapply every time you need funds.
Of course, all you have to do is stop in or give us a call and we can help you figure out which route is best for you.