What's the difference between a home equity loan and line of credit?

My Home May 25, 2017
 

If you’ve built up equity in your home, why not leverage it to finance some important goals in your life and make your dreams a reality?

Not sure which option is right for you? Let's look at some information which may help you make an informed decision.

Equity is the difference between your home’s market value and what you owe on your mortgage.

Loan vs. line of credit: What’s the difference?

With a ...

Home equity loan you borrow a one-time lump sum of money.

  • Flexible terms
  • Competitive fixed rates
  • No up-front fees

Key Benefits

  • Enjoy the security of fixed rates and fixed payments for the life of your loan
  • Flexible terms
  • Interest may be tax-deductible1 (add superscript 1)

Worth considering if you ...

  • Have a home-improvement project or other one-time expense over $15,000
  • Want to consolidate debt and stay focused on paying it off
  • Do not need ongoing access to funds

With a ...

Home equity line of credit you get approved for a line of credit.

  • Money available now or later — you can decide
  • Flexible repayment terms
  • No up-front fees

Key Benefits

  • Borrow as little or as much as you need, up to your approved credit line
  • Lock in a fixed rate on existing balances anytime2 (add superscript 2)
  • Interest may be tax-deductible1 (add superscript 1)

Worth considering if you ...

  • Are planning a home improvement project with multiple expenses over time
  • Want to consolidate debt with the flexibility to borrow more funds in the future
  • Want a ready source of money for unexpected expenses

Keep in mind ...
Home equity loans and lines of credit are secured by your home. If you can’t pay them back, you could put your home at risk. Make sure to have a secure repayment plan in place and only borrow what you need.

 

1. U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation. 2. A $50 fee applies to each FRO. A maximum of 3 active FRO are permitted on a Home Equity Line of Credit. Property insurance is required. Other restrictions may apply.