What is the difference between a home equity loan and a home equity line of credit? A home equity loan is a fixed loan amount that uses the equity in your house as collateral. A home equity loan typically has a lower interest rate than a bank loan or credit cards, which is why many people use it to pay off credit card debt, finance an education or purchase automobiles. In most cases the interest on a home equity loan can be used as a tax write-off, much like your mortgage interest.

A home equity line of credit is an open line of credit for you to borrow against. It has the same lower interest rate and potential tax write-off benefits of a home equity loan, except it is not for a fixed amount. Many borrowers use this option for remodeling or other cases when they do not know the exact amount of financing they will need for a project.

No Cost Home Equity Line of Credit