What is the difference between a Home Equity Line of Credit (HELOC) and a fixed rate equity loan?
Both are generally used as a second mortgage. A fixed rate home equity loan is just like any fixed rate loan. You borrow a certain amount and pay it back over a predetermined length of time with the payment and rate being fixed. A Home Equity Line of Credit or HELOC, is like a giant credit card secured by your home. You have a credit limit that you can borrow up to and pay back on a regular basis. The lender charges you the interest only on your outstanding balance at any given time. It is up to you to pay back principal. All equity lines are adjustable and are based on Prime Rate plus a margin. Either type of loan can be very useful for a wide variety of purposes. Speak to a loan officer regarding which loan fits your particular situation best.
