Home Equity Line Of Credit Versus Loan

Added February 27, 2009 by Ilyce R. Glink

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Summary: What's the difference between a home equity line of credit and a home equity loan? Both a home equity loan and line of credit come from the equity in your home, but are used differently.

LETTER 3: What's the difference between a home equity line of credit and a home equity loan? And should I get one to pay off my credit card debt? What about using one to pay off the balance of my mortgage?

ANSWER: Home equity is the difference between what your home is worth on the market and your loan amount. A home equity loan taps into that equity and you can write off the interest you pay on the loan. A home equity loan means you get the cash in a lump sum. A line of credit works like a credit card.

Home Equity Loan: lump sum Line of Credit: like a credit card

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