Whether you are repairing your home or need some extra cash, a home equity loan or HELOC could be the right product for you. Both products use your home as collateral to make them secure. While a HELOC is a line of credit you borrow from as needed, a home equity loan gives you a lump sum of money up front and has fixed, regular payments. Let us dig a little deeper into the product differences and which might work for you.

What are the Differences Between a Home Equity Loan and HELOC?

Understanding how both products work is key to helping you better decide what works for your financial situation. Whether you are leaning towards a home equity loan or HELOC, both have attributes that can satisfy your money borrowing needs.  

Should I use a Home Equity Loan or HELOC?

Now, the best way to decide between the two home equity products is to review which attributes benefit your financial situation. The following financial needs will lead you to a home equity loan.

• You know the exact cost of a project and need the money right away
• When borrowing money, you prefer a fixed rate.
• A solid payment plan works for your budget needs.
• You would like to consolidate a specific amount of debt at a lower rate.  

On the other hand, a HELOC will work for you in these financial situations.

• When you are looking to borrow money in a more flexible way as expenses pop-up on a project.
• You have upcoming expenses, like college, and don’t want to borrow until you are ready.
• Your budget works better with fluctuating payments.

Both products are great options to use when needing to borrow money. When deciding, make sure you understand the interest rates, fees, and monthly payments of each product. For more information on these products, head to our Real Estate Center.