Home Equity Loan vs. Line of Credit

HOME EQUITY

HOME EQUITY LINE OF CREDIT

DescriptionA long-term loan secured by the equity in the borrower's homeA revolving line of credit secured by the equity in the borrower's home
How Funds are ReceivedA lump sum is received when the loan closesA line of credit to draw from as needed during a permitted draw period (you may choose between 5 and 10 years)

Terms

 

You may choose between a 5-, 10-, and 15-year termYou may choose between a 5- and 10-year draw term

Interest Rates

 

Fixed rates, so you are protected from payment fluctuations throughout the life of the loanVariable rates.  You can choose between the 5-year term or a 10-year term with a variable rate.
RepaymentYou will have a monthly repayment schedule, and your monthly principal and interest payments will remain the sameWith the 5-year term you will have interest only payments and a balloon payment at maturity.  With the 10-year term you will have a payment of 1/2% of the Outstanding Balance plus all accrued Finance Charges or $100 + all accrued Finance Charges, whichever is greater A balloon payment may result at maturity.
Loan / Line AmountsMinimum Loan Amount of $5,000Minimum Loan Amount of $5,000
Maximum Financing (CLTV)*Up to 89.9%*Up to 89.9%*

 

(See a repayment example here)

*Combined Loan to Value: The total of all liens on the property divided by the value of the property. Subject to credit approval. Certain restrictions may apply. With qualified credit, loans may be approved up to 125% CLTV.

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