Home Equity Loan and HELOCs

A home equity loan and (HELOCs) is a financial product that allows a homeowner to borrow against the equity in their home. Equity is the difference between the value of the home and the amount the homeowner still owes on their mortgage. Home equity loans can be a useful tool for homeowners who need to borrow a large sum of money and want to use their home as collateral. When a homeowner takes out a home equity loan, they receive the full loan amount in a lump sum and are required to make regular payments to repay the loan over a set period of time.

A home equity line of credit (HELOC) is similar to a home equity loan, but instead of receiving the full loan amount upfront, the borrower is approved for a line of credit that they can draw from as needed. This means that the borrower can borrow money as they need it, up to their approved credit limit, and only pay interest on the amount they have borrowed. Like a home equity loan, a HELOC uses the borrower’s home equity as collateral. Both home equity loans and HELOCs can be a useful way for homeowners to access the equity in their home to meet financial needs, but it is important to carefully consider the terms and conditions of these loans before committing to one.