The main differences are:
- A home equity loan has a fixed-rate. A line of credit has a variable interest rate that adjusts with the Prime Rate.
- With a home equity loan, you make fixed payments of principal and interest. With a home equity line of credit, you are only required to make interest payments during the draw period.
- With a home equity loan after closing, you get the entire loan amount in one lump sum. By contrast, a line of credit is available for a long-term draw period, which you can access with home equity line of credit checks or through online banking. If you pay down the principal during your draw period, you can borrow that principal again if you want to.
- Learn more about home equity loans or lines of credit