With a home equity loan, you will receive a lump sum up front, and then you will make regular monthly payments for a set period of time at a set interest rate, which provides a more structured loan.
With a HELOC, the rate is variable, and the monthly payment is based on the amount advanced on the line. As you repay funds borrowed against your line, they immediately become available again. You can use as much or as little as you want, which gives a HELOC more flexibility.
Basically both types of loans use your home’s equity as collateral for the loan. Both extend credit to a borrower up to a predetermined amount. Both can be used for home improvements, buying a car, consolidation of debt, college tuition, or unplanned expenses. What makes them different is how they are structured. With both types of loans, the interest you pay may be tax deductible. (Consult your tax advisor for specifics on tax deductions.)
As with any loan, there is risk involved. When using your home as collateral, there is a possibility of losing your home is you were to default on your loan. Please stop in or give us a call to learn more about home loans in Wausau, Weston, Schofield, Rothschild and surrounding areas.