Home Equity Loans & HOme Equity Line OF Credit - The Difference
Home Equity Loan also referred to as a second mortgage in some cases lets you borrow a certain amount at a fixed interest rate. This amount has to be paid back just as a mortgage would have to be.
Home equity line of credit means that you are approved to borrom a certain amount, but you may not borrow all at once. Home equity line of credit does not have a fixed interest rate.
Both, home equity loan and home equity line of credit are tied to the equity in your current home.
Generally, the home equity line of credit is more suited for short term borrowing, as it is offered at a lower rate of interest which is also variable.
However for the long term, home equity loans may work out to be a better option since you can have them locked in at a certain interest rate.
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