A Home Equity Line of Credit and a Fixed Rate Home Equity Loan both let you borrow against the equity in your home, but they work differently. A HELOC gives you a revolving line of credit, which means you can borrow what you need, repay it, and borrow again within your approved limit while the line remains open. A Fixed Rate Home Equity Loan gives you a lump sum up front that you repay over a fixed period of time at a fixed rate.
How a HELOC works
With a HELOC, your interest rate is typically variable, and during the draw period you may make interest-only payments on the amount you have borrowed. A HELOC can be a good fit when you want flexible access to funds over time for expenses such as ongoing home projects, education costs, or unexpected expenses.
How a Fixed Rate Home Equity Loan works
With a Fixed Rate Home Equity Loan, you receive a one-time lump sum and repay it with fixed monthly payments over the life of the loan. This option may be a better fit if you know exactly how much you need to borrow and want a more predictable payment structure.
Which option may fit your needs?
A HELOC may make more sense if you want flexibility and expect to borrow in stages. A Fixed Rate Home Equity Loan may make more sense if you want a set loan amount, a fixed interest rate, and consistent monthly payments. For a closer look at the differences, read our blog post HELOC vs. Fixed Rate Home Equity Loan page.
If you want help comparing your options, call 248-263-4100 or connect with a Home Equity Specialist.
