what is the diffrent betwen home equity line of credit and home equity loan?

Answer 1

A home equity loan is a fixed amount of cash borrowed against the equity of a home.

A line of credit is an amount of credit available to a homeowner but not necessarily used to the max amount at any given time. One can write checks against the account at any time, as long as available funds remain within the limits of the credit line.

In either case, payments are due each month.

Answer 2

Both loans allow you to borrow the equity you have built in your home.
A home equity loan is a loan for a set amount that you pay back in monthly payments for a set period of time
A home equity line of credit (HELOC) is a loan that usually requires interest only payments. As you pay down the principle, that money becomes available again unlike a home equity loan. Also, you are only charged interest on the portion of your available HELOC that you have actually taken.

For example: if you have a $30,000 heloc and the rate is %8.75 and you are using $15,000 your minimum payment would be $109.38 per month and you still have $15,000 available for use. If you pay down the balance your payment drops but if you use more of your available credit, the payment goes up. One nice advantage of a HELOC is even if you pay off the balance, the account is still there for future use (unless you specifically close it) Once a home equity loan is paid off you would need to apply for a new loan to get more money.

Home equity loans are better if you think you will only need the money once for a specific large expense. HELOC's are better for those who want on going access to cash in times of need.

Answer 3

A line of credit is like having a credit card with your house as collateral... you can use $5,000 here.... another $8,000 there. To pay it back, you get a monthly statement that can go up and down, like a credit card bill.

A home equity loan is a one time deal. You get ONE check for a specific amount, and have to pay it off in regular payments per your loan agreement.

Both are based on the difference between the value of your home, and how much you've actually paid into it.