Home Equity May 1, 2024

Home Equity Loan vs. HELOC: Choosing Your Path

Need to tap into your home equity? Some need it for a home remodel, some want to consolidate their debt. But how should you do it? The two popular choices are home equity loans & home equity lines of credit (HELOCs). But what’s the difference?
A home equity loan, sometimes called a “second mortgage” is like a traditional mortgage. You receive a lump sum upfront, which you repay in fixed installments over a predetermined period. This loan type has fixed interest rates, making budgeting easier.
On the other hand, a HELOC operates more like a credit card. You’re given a line of credit against your home equity, & you take out money as needed. You only pay interest on the amount you use. Afterward, a repayment period kicks in, during which you pay back both principal and interest.
Both options have Closing costs, covering fees such as application charges, title searches, & attorney fees.
Have questions about the different types of loans? I have resources for you! Karen Daugerdas, Coldwell Banker Real Estate Broker, 847.494.1102.
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