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