What’s the difference between a fixed-rate home equity and a variable-rate home equity (HELOC)?
Funds for a fixed-rate home equity loan are disbursed at the time of loan settlement. Your repayment is over a specified period of time and your monthly payments are the same for the duration of your loan. The interest rate on a fixed-rate loan remains the same for the term of the loan and will not change. A variable-rate home equity loan is a line of credit which you can draw from at any time. You can take any amount up to your available limit any time throughout the draw period and repayment is based on the balance each month at billing. The rate on this loan is based on a published index such as Prime Rate and can vary from month to month.
