When it comes to financing major expenses or projects, homeowners often turn to their home equity as a valuable source of funding. Two popular options for tapping into home equity are home equity loans and Home Equity Lines of Credit (HELOCs). Both offer advantages and drawbacks, so it’s essential to understand the differences between the two to determine which option is better suited for your financial needs.

Home Equity Loan

A home equity loan is a lump sum loan that allows you to borrow against the equity in your home. This type of loan typically comes with a fixed interest rate and a set repayment term, making it ideal for those who prefer predictable monthly payments and a one-time infusion of funds.

Pros of Home Equity Loan:

• Fixed interest rate provides stability and predictability.
• Lump sum payment upfront can make it easier to budget for expenses.
• Ideal for one-time expenses