HELOC or Home Equity Loan—What Option Is Right For You?
When borrowing against your home’s equity, you can choose between a Home Equity Line of Credit (HELOC) or a Home Equity Loan. Though similar, each offers different benefits depending on your needs.
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1Must be 18 or older to apply. Loans are subject to credit approval.
What is a HELOC?
A Home Equity Line of Credit (HELOC) allows you to borrow against the equity in your home, offering flexible terms and potentially lower rates compared to other loans.
Key Features of a HELOC
Credit Line: Borrow against your home’s equity with a revolving line of credit
(Much like a credit card, you can borrow, repay, and borrow again.)
Interest Rates: Fixed or variable rates that may cause payment fluctuation
How HELOCs Work
Borrow and Repay: Like a credit card, you can borrow, repay, and borrow again
Monthly Payments: Include a portion of the principal, interest, and annual fees
Flexible Use: Unlike home equity loans, HELOCs allow you to borrow as needed, not in a lump sum
Ready to Tap Into Your Home's Equity?
FSB's HELOCs are straight lines of credit that draw for the loan's life. When your HELOC matures or comes due, repay the balance or re-apply for another loan.
What is a Home Equity Loan?
A Home Equity Loan allows you to borrow against the equity you have built in your home. Home equity loans offer a fixed interest rate and repayment terms and will not change unless refinanced.
Key Features of Home Equity Loans
Fixed Interest Rate: The interest rate is fixed and influenced by factors such as your credit score and home equity position.
Lump Sum Payment: Receive all funds in one lump sum after closing.
How Home Equity Loans Work
Monthly Payments: You will be required to make monthly payments on the loan.
Borrowing Amount: Know how much you need to borrow before committing to the loan.
Other Things to Consider: Typically, homeowners must have roughly 15% equity to qualify
Which Option Is Best For You?
A HELOC may be the right option if you need flexibility, don't know the amount to borrow, and can manage varying payments based on interest rates.
A Home Equity Loan may be the right option for those who know how much they need, prefer predictable monthly payments, and have at least 15% equity in their home.
If you want additional advice on the best solution, speaking to your consumer lender is always a good idea.
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