Members Thunderbroom Posted January 2, 2009 Members Share Posted January 2, 2009 What's the practical difference between these? As I understand it, a HELOC is just like a credit card in that you get pre-approved for a certain amount and can use as much or as little as you want/need and continue to borrow against it as you pay it down whereby the regular loan is just a predefined amount that you borrow and payback. Is this right? Are the interest rates different? We're looking at some major home renovations. We had a flooring person come by today for estimates. A few months back we had siding folks come out. We need to paint as well. Is there a benefit to one over the other? Link to comment Share on other sites More sharing options...
Members Zon5string Posted January 2, 2009 Members Share Posted January 2, 2009 That's it...in a nutshell. I had a HELOC a while back, and it actually came with it's own credit card, and checks. There is often a minimum amount you can use at a time, also. Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted January 2, 2009 Author Members Share Posted January 2, 2009 That's it...in a nutshell. I had a HELOC a while back, and it actually came with it's own credit card, and checks. There is often a minimum amount you can use at a time, also. Why get one type of loan over the other? There must be a difference if there are two instruments available. Link to comment Share on other sites More sharing options...
Members Wanderlusterer Posted January 2, 2009 Members Share Posted January 2, 2009 Why get one type of loan over the other? There must be a difference if there are two instruments available. http://home-equity.interest.com/home-equity/home_equity_rates.html The above pretty much explains it. Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted January 2, 2009 Author Members Share Posted January 2, 2009 http://home-equity.interest.com/home-equity/home_equity_rates.htmlThe above pretty much explains it. Great info. Thanks for posting it!! Link to comment Share on other sites More sharing options...
Members Wanderlusterer Posted January 2, 2009 Members Share Posted January 2, 2009 Great info. Thanks for posting it!! You're welcome. Link to comment Share on other sites More sharing options...
Members BeeTL Posted January 2, 2009 Members Share Posted January 2, 2009 A HELOC is a line of credit, like a credit card, meaning you can deplete and restore the available funds over a period of time, and payments fluctuate accordingly. In theory, you should pay a slight premium in interest rate for this flexibilty. By contrast, a Home Equity Loan is typically fixed in terms of the distribution amount, interest rate, payment period, etc. In theory, you should get the best possible rate on the Home Equity Loan because it is a more predictable financial instrument for the lender. Of course, YMMV. Edit: Yup...should've read the link... Link to comment Share on other sites More sharing options...
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