Feature, Home Equity Line of Credit (HELOC), Home Equity Loan ; How It Works, A revolving line of credit based on the equity in your home, A one-time loan based on the equity in your home ; Money Received, Draw on funds as needed, One upfront lump sum ; Interest Rate, Variable, Fixed ; Loan Term, Draw periods typically run for 5-10 years, with 10-20 years to repay, Typically 5-15 years ; Repayment, Interest-only payments during draw period, followed by interest and principal payments, Principal and interest payments ; Who Is It Best For, Borrowers who want ongoing access to funds and don’t know how much they need, Borrowers who know how much they need and want fixed monthly payments
HELOCs provide a revolving line of credit with variable rates, ideal for flexible, ongoing expenses. ; Home equity loans offer a fixed lump sum at a fixed rate, suitable for large, known expenses. ; Choosing between the two depends on your need for flexibility (HELOC) or predictable payments (home equity loan).
There are pros and cons to picking a home equity line of credit (HELOC) or a mortgage — but the two are not the same.
, Home equity line of credit (HELOC) ; What you can use it for, It’s up to you. ; Factors that affect what you can borrow, Your home’s value, remaining mortgage amount. ; When you can access funds, You access funds as you need them, and you don’t need to use the full amount at once. This is also called revolving credit — similar to a credit card.
Knowing when to use a HELOC vs. a personal loan can help you choose the best loan for your circumstances.
Borrow using your home equity as collateral with rates that typically beat unsecured personal loans ; Choose between a fixed or variable rate and switch between the two at any time, though fees may apply ; A $50 annual fee is required to keep a PNC HELOC active, and additional fees may apply when establishing a new credit line
A home equity line of credit, aka HELOC, and a home equity loan are ways to finance large expenses by borrowing against the equity in your house. Equity is the difference between what you owe on your mortgage and what your home is worth. "If you need access to cash and your primary driver is the equity in your home, it's a way to convert equity into cash," says Bill Dallas, chairman of Dallas Capital, a company that advises businesses and entrepreneurs. HELOCs can help you cover ongoing costs, and home equity loans are suited to one-time expens ...
If you're trying to compare a HELOC vs. a cash-out refi, it's important to understand how they work and which situations they may be best for.
Current HELOC rates ; 10-year : 8.07%, 20-year : 7.98%
Compare HELOCs vs. home equity loans. Learn the differences and pros,and cons to decide which option is best for you.