Several homeowners get confused between a home equity line of credit and a home equity loan. Here is what you should know when it comes to both loans.
Hey gang. Michael. I want to talk to you today about the two distinct differences between a home equity line of credit, and a home equity loan, because most banks in in credit unions offer both products. You have got to make sure that when using our strategy, you use a home equity line of credit, not a home equity loan.
See, a home equity loan, we’ll start with that, is one lump sum cash that the bank gives you for home improvements, or to consolidate debt.
Let’s say they give you $25.000, now they’re amortizing that loan, $25.000, over 20 years. You have a fixed payment for 20 years, until it gets paid off. With the home equity line of credit, money moves in and out freely, so as the balance goes down, so does the payment.
We’re actually going to use that as a checking account, so you have to have the tool, that when you’re putting money in, you have to be able to pull it back out. With a home equity loan, you can only put money in, you can’t pull money back out. Thanks for watching our video, again, be sure to subscribe. Look forward to seeing you, take care, and God bless.