Difference Between Line Of Credit & Standard Home Equity Loan

Everyone wants to buy their own home but buying a home is not so easy, it can be a life changing experience. If you decide that the time has come, using a home equity loan may be right for you. 

To get any kind of Home Equity Loan Click here

Generally, a loan is for a fixed dollar amount, for a fixed period of time, with fixed monthly payments. But their is another option called line of credit. It is similar to a credit card because it only requires payments when there is an outstanding balance. The line of credit is revolving, you can borrow, repay and borrow again. Unlike a loan, there is no initial balance on a line of credit. There are many more differences between the two types of home equity loans.

They are as follows-----

Topics	Home Equity Line of Credit (HELOC)	Standard Home Equity  Loan (SHEL)
Main	A revolving line of credit that provides the borrower with a checkbook or a credit card that is used to borrow funds against the home equity.	A loan for a specific amount with a set rate and fixed monthly payments. This may be your best option if you know exactly how much you need and want to have monthly payments that are fixed for the term of the loan.
APR	The APR for this type is based only upon the interest rate; it does not include any of the other charges.	The APR for this type is calculated based upon the interest rate, other finance charges, and points.
Rate Of Interest	Variable Rate based on WSJ Prime (currently 4%) + Margin, funds borrowed do not begin accruing interest until a purchase is made against your equity.	Fixed rate and term, funds borrowed start accruing interest immediately after the lump sum is disbursed
Repayment	Revolving Repayment Period - as you pay off your loan, you can re-borrow up to your credit limit. Monthly payments are 1.50% of balance owed. Only pay interest on the amount you borrow, not the entire credit line.	Fixed Repayment Period - you can choose a term that works for you, such as 5 years, 10 years, 15 years or 20 years.  Ease of budgeting with fixed monthly payments.
Loan Amount	Up to 80% of the Fair Market Value of your home less any liens, OR 50% of Fair Market Value, whichever is less	Up to 80% of the Fair Market Value less any outstanding liens
Minimum Loan Amount	Minimum line amount $4000	Minimum loan amount $5000
Access to Funds	Flexibility to re-borrow after paying back	Borrow once and pay off; must reapply to borrow more
Added Benefit	Tax-deductible interest	Tax-deductible interest
Conclusion	Ideal if you know the exact amount that you will need and want to have fixed monthly payments. To get the best line of credit Click here	Ideal if you want the flexibility to borrow as you need it. Your monthly payments will go up or down depending on how much you borrow and how much you've paid off . To get the home equity loan Click here

So through this comparison u can make out which ever is best for you. But at the same time it's important to shop around at several different banks to get the best rates and the best terms. 

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