Home Equity Loans or Term Loans are a when you are paid the entire loan up front in one lump sum. Payments are then made each month over a set period of time with a fixed interest rate.
A Home Equity Line Of Credit (HELOC) allows you to borrow a certain amount within the timeframe of the loan. During the timeframe, you are able to take cash out from the loan as you wish. All HELOC’s have a credit limit almost like a credit card. This type of loan offers a lot of flexibility. Credit lines have a variable interest rate that fluctuates over the timeframe of the loan. Payments vary depending on the amount of credit you have used and the interest rate. All borrowed money must be paid off once the loan timeframe has expired.