There are two ways to approach borrowing against the value of your home: a Home Equity Loan and a Home Equity Line-of-Credit. Both are valuable options when dealing with larger purchases, consolidating expenses and more.
Home Equity Loan
Often called a second mortgage, a Home Equity Loan is great when dealing with major expenses. Sometimes, savings aren't enough and flexible funds could come in handy. If you have large one-time purchases, like tuition, renovations, improvements or medical expenses, a home equity loan can help you cover it.
To obtain a Home Equity Loan, you apply for a specific amount of money, you receive it all at once, then pay it back over time.
Home Equity Line-of-Credit
Enjoy the convenience of the cash you need, when you need it most. A Home Equity Line-of-Credit, often known as a HELOC, is great for consolidating recurring loan payments, such as college bills and high interest credit cards. When obtaining a HELOC, your home is used as collateral.
You'll be approved for a certain amount of money which will be repaid within a designated time-frame. During that time, you'll only be accountable for what you use when you need it. This is perfect for projects where the total is not defined, so you're able to use a little at a time or however you see fit.