Rates for both home equity loans and lines of credit fell this week. The average variable rate home equity line of credit plunged from 5.38 percent to a 3-year low of 5.24 percent. The average fixed rate home equity loan retreated from 6.58% to 6.53%.
Much of the choice between a home equity line of credit and a home equity loan revolves around how soon the borrower needs the money. A home equity loan is disbursed in a lump sum, then repaid in even monthly installments over a defined period of time, which makes it a great option for one-off expenses or a debt consolidation.
A home equity line of credit on the other hand is a revolving line that can be drawn down ... and repaid ... based upon when the borrower needs the money and has the cash flow to make larger payments. Many borrowers favor this flexibility for things like home improvements that are incurred in stages or ongoing college tuition payments.
To search rates on home equity loans and lines of credit, visit Bankrate.com. I'm Kristin Arnold.