Home equity is an asset that comes from a homeowner's interest in a real property. This is the difference between the property's market value and outstanding loan balances. Home equity can increase over time as the homeowner makes payment of the loan balance or the market value increases.
There are 2 types of Home Equity Loans
HELOC VS. HELOAN
HELOC
What it is?
Home Equity Line of Credit
- A home equity line of credit, works more like a credit card. It lets you borrow a certain amount of credit available as needed and has an adjustable rate that changes with the market.
HELOAN
What it is?
A home equity loan lets you borrow a lump sum and pay it back over a fixed term at a fixed interest rate.
HELOC
How Beneficial it is?
- Funds can be accessed at will anytime
- Can boost a homeowner's credit score, when used correctly
HELOAN
How Beneficial it is?
- If you need specific amount of money
- To pay debt with fixed, lower interest rate
HELOC
When is it needed?
- Ongoing House remodeling
- College Fee Payment
- Emergency Expenses
HELOAN
When is it needed?
- Buying a car
- Debt consolidation
- Specific home repair or improvement
HELOC VS. HELOAN
HELOC
- An adjustable interest rate
- Draw money as you need it
- Pay interest only on the amount you draw
HELOAN
- Gives Lump sum money
- A fixed and lower interest rate
