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Home Equity Loan/Home Equity Line of Credit: If your home is worth more than you owe, you may qualify for a home equity loan or a home equity line of credit and be able to borrower against a portion of the available equity in your home. So which product is right for you? You should talk to your personal financial advisor before making any decisions. If you become delinquent on your payments to your mortgage and your home equity loan you could lose your home in a foreclosure proceeding. Think about the additional monthly payment and if you truly have an ability to repay it. Be honest with your lender and provide all the requested documents and fill out a formal application with the lender you choose, pay attention to points, fees, interest rates and terms associated with each product and find the one that suits your personal financial situation.

Home Equity Loans: Most Home Equity Loans have a fixed interest rate, so your monthly payment will be consistent for the agreed-upon term. The interest you pay is generally tax deductible, but you should always consult a financial advisor or tax professional to confirm. Qualifying for a Home Equity Loan depends on a variety of factors, including the underwriting criteria set by the lender, the amount of available equity in your home, and your ability to repay the loan. Generally, lenders review factors such as your credit score, credit history, employment history, debt, income and ability to repay. Some lenders require that you have an account with them and have a certain percentage of equity in your home to qualify. Be sure to ask lenders about any upfront fees or prepayment penalties, among other terms and conditions.

Home Equity Line of Credit: A Home Equity Line of Credit (HELOC) is a type of loan that is also secured by your home but different from a loan in that it provides for a “draw period,” which is the period of time (e.g., 10 years) during which you can access the line of credit when you need it (similar to how you use a credit card). HELOCs can be a good option if you do not need the full amount of credit available all at once. With a HELOC, you can use (draw on) what you need, begin repayments, and then draw again (during the draw period) when you need additional funds. Generally, a HELOC has a variable interest rate that is based on a predefined index rate, such as the U.S. Prime Rate. This means your payment amount may fluctuate. Terms for repaying HELOCs vary and can be, for example, 25 years, including a 10-year draw period.

You should consult a financial advisor or other qualified professional before making decisions to determine what may be best for your specific situation. Note that with either a home equity loan or HELOC, if you become delinquent on your payments, you could lose your home in a foreclosure proceeding. Be sure to consider the additional monthly payment that comes with these products and if you truly have the ability to repay it, in addition to any other credit obligations.

*N/A indicates that rate information is not available for that loan scenario due to limited offer data for the relevant time period or other data constraints.

LendingTree does not warrant lender information or data and makes no claim as to the availability of terms associated with these products. Ask each lender what criterion is required to qualify for each product. Rate and terms may change at any time before or after account opening and vary by property type, loan amount, credit history, lien position, and loan-to-value (LTV) ratio, debt-to-income (DTI) ratio, FICO score and draw amount at closing, if product is chosen. Generally, home equity loans are not available for homes currently for sale. Homes previously listed for sale must generally be off the market for at least 90 days prior to applying to lenders for a home equity loan or HELOC. Rates subject to change daily and minimum line amounts may apply. All accounts are subject to individual lender approval. For more information, see http://files.consumerfinance.gov/f/201204_CFPB_HELOC-brochure.pdf.