Equity Line of Credit
Home equity loans and lines of credit: Similar loans, different purposes. Yet
consumers should consider several things before jumping into either financing
product, experts say. That's because home equity lines of credit typically are a
good deal for those who want a lower up-front rate and access to money at
unpredictable times. However, home equity loans are better suited to those who
need a specific amount of money and payment stability.
"With a home equity line of credit, you can open it and you're only
going to pay for the amount of money you use," says Peter Traum, a
Morristown, N.J. branch manager for KeyCorp's Champion Mortgage lending
subsidiary. "With a second mortgage, you're going to get a check, and
you're going to make payments until you pay that amount off."