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HELOC vs. Home Equity Loan

Whether you’re a new homeowner or have owned your home for years, it’s likely that regular upkeep and maintenance will be needed at some point. And when it comes to home expenses, they can be pricey and catch you off guard just when you think your financial life is right on track. Luckily you have options when it comes to handling these expenses without relying on a high-interest credit card that will take you years to pay off. 

With that said, it can be confusing when trying to determine your Home Equity financing options. There are several types of home equity financing options available and here’s a quick overview of the product differences:

  • HELOC: This product is a revolving line of credit and you can use the money when you need it. The interest rate is variable, so your monthly payments can change. Similar to a credit card, you’ll have a minimum monthly payment, but of course can pay more than the minimum if you’d like. 
  • Home Equity Loan: This type of loan is similar to any other loan you’d get from your financial institution. You borrow a set amount of money at one time and pay back according to the terms agreed upon. The rate is fixed so your payment remains the same throughout the life of the loan.
  • Hybrid Home Equity: Just like its name, this product takes the best features from a HELOC and Home Equity loan and combines them. Like a HELOC, you start with a revolving line of credit with a variable rate that you can draw on when you need it. Once you draw on the line of credit, you can lock-in a fixed-rate on that portion of the balance giving you a fixed monthly payment until that balance is paid off - just like with a Home Equity Loan.

Check out our Hybrid Home Equity

Home improvement projects, debt consolidation, college, weddings, vacations ... it can really add up. Our Hybrid Home Equity is here to help, plus get a low introductory rate of 2.74% APR1 for 12 months, 3.99% thereafter.

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Finally, it’s important to outline a plan for repayment. Make sure you’re working these expenses into your monthly budget so you can actively pay off the balance quickly to help regain your financial freedom. It’s important not to use this money for carefree spending. Work these items in elsewhere in your budget to ensure you have a plan and aren’t relying on credit and ultimately finding yourself further in debt.

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