Your home equity is the amount of your home that you own – in other words, the market value of your home minus the amount of principal that you owe on your loan. For many Americans, it’s one of their largest financial assets.
If you need money for various projects and expenses, your home equity can be a useful source of collateral. You can draw on this asset with a home equity loan or a home equity line of credit (HELOC).
While home equity loans are usually lump sum loans with fixed payments and interest rates, a HELOC acts more like a credit card limit. You can draw against your HELOC up to that limit and replenish the supply of available credit by paying off part of the HELOC and the associated interest.
Home equity loans can be attractive for moderately large expenses. Currently, home equity loan interest rates are near 6% and HELOC rates are approximately 6….