Both a Home Equity Loan and a Home Equity Line of Credit (HELOC) use your home's equity as collateral.
A Home Equity Loan is a second mortgage on your home and is a fixed loan that involves a single disbursement of funds. It doesn’t replace your current mortgage; instead, it’s a second mortgage with a separate payment. For this reason, home equity loans tend to have higher interest rates than first mortgages.
A Home Equity Line of Credit (HELOC) is a lot like a home equity loan in that it’s a second mortgage on your home. The main difference is that you don’t get a lump sum of money upfront. Instead, a HELOC gives you a line of credit that you can draw from when you need it. The credit limit corresponds to the amount of equity you have in your home. You can withdraw HELOC funds at any time during the draw period. With a WEOKIE Fixed Rate HELOC you can opt for a fixed-rate loan with a low minimum payment of 1% of the balance (or $50, whichever is greater).
