Sometimes it's helpful to compare and contrast different types of loans. A Home Equity Line Of Credit (HELOC) is similar to a Home Equity Loan, but there are some important differences.
Generally, a HELOC is more flexible than a home equity loan. You only borrow what you need, and you can typically go back for more money when you need to (as long as you stay below your maximum credit limit, and as long as your lender does not cancel your line of credit unexpectedly). You might use a checkbook or payment card to access your line of credit.
With a home equity loan or "second mortgage," you do it all in one shot. You'll get the entire maximum loan amount in one lump-sum, and you'll have to pay interest on the entire loan balance. With a HELOC, on the other hand, you only owe interest on any outstanding loan balance.
Typically your monthly payments will remain the same each month with a home equity loan, and you'll have a fixed interest rate (or one that only changes periodically).
The most common line of credit for consumers is a home equity line of credit (HELOC).
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