Are you in need of money and struggling to choose between home equity loans and a HELOC? Worry not. For a better understanding, read this article exploring the two financing types.
As explained in the video, a home equity loan allows a borrower to use their home as collateral when securing a loan.
The borrower gets a lump sum payment upfront, and the loan is repaid with a fixed monthly repayment over a predetermined period, typically between 5 to 30 years. Home equity loans are popular for renovations and can be used to meet other needs like education. However, to avoid spending on unnecessary things, spending money on expenses that add value to your home is crucial.
HELOC, on the other hand, is flexible. It is a loan option that allows the borrower to borrow what they need, and once they pay it off, they can borrow again. Typically, it is like a credit card where you pay back the amount you use, not the entire loan. As the video explains, the loan is not amortized, has adjustable rates, and can be borrowed on top of a mortgage. Now that you understand the difference between home equity loans and HELOC, you can choose the option that fits your financial needs.