Topic: Home EquityWho is affected: HomeownershipDEGREE OF DIFFICULTY: EasyWhat you'll need: Thinking capWhat you need to knowIf you've invested in a home and watched your equity build over the years, you can tap that equity for a new car, home improvements, college tuition or other expenses.There are two main options for such borrowing: the home equity loan and the home equity line of credit, or HELOC.Which is best for you?The general rule of thumb is that if you need the money all at once, it's better to take out a home equity loan. But if you'll be spending the money in installments, such as for your child's college education, you're better off with a HELOC.A home equity loan is delivered in a lump sum. A HELOC, on the other hand, is doled out in installments.Step-by-stepIf you're still on the fence between an equity loan and a HELOC, our calculator can help you determine which is best for your specific needs.Related linksTools & resourcesTipsLoan or line of credit?The FAQs of home equityFinding the best loanAll about cash-out refinancingTaxes and your HELOCKeeping liquid in a home equity freezeTap equity deftlyBorrowing against your home a good move?Compare line of credit ratesOne major benefit -- or drawback, depending on how you look at it -- of the HELOC is that you have the option of only paying the loan's interest for several years. Of course, the killer price to pay for this can be an expensive balloon payment due at the end of the loan's term. advertisementRelated Links:Fixed-rate home equity loan can cut riskNational home equity loan averagesNew FHA reverse mortgage boon to seniorsRelated Articles:Tapping equity to buy carHome equity ratesHome equity rates
There are two main options for such borrowing: the home equity loan and the home equity line of credit, or HELOC.
Which is best for you?
The general rule of thumb is that if you need the money all at once, it's better to take out a home equity loan. But if you'll be spending the money in installments, such as for your child's college education, you're better off with a HELOC.
A home equity loan is delivered in a lump sum. A HELOC, on the other hand, is doled out in installments.
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