Choose the Home Equity Loan Type that makes sense for you
When choosing a loan using your home as collateral, you have
three basic choices: equity loan, home equity line of credit (HELOC) or cash-out
refinance. We’ll break down the pros and cons of each option.
|
Equity Loan |
HELOC |
Cash-out Refinance |
| Fixed or adjustable? |
Fixed |
Adjustable (can have an interest only option) |
Either (can have an interest only option) |
| Why choose this? |
- You prefer the security of a fixed-rate loan.
- You want to keep your existing mortgage.
|
- You prefer a line of credit over a lump sum.
- You want the lowest rates on your loan.
- You need the money fast.
|
- You already want to refinance to take advantage of lower rates.
- You need more than $100,000.
|
| Why not choose this? |
The rates are higher than their HELOC counterparts. |
Rates are adjustable, so they may rise over time. |
- You want to keep your existing mortgage.
- You need the money fast.
|
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