Home Equity Loan Vs HELOC: What’s the Difference?

Home Equity Loan vs. HELOC - Home equity loans and home equity lines of credit (HELOCs) are loans that are secured by a borrower’s home. A borrower can take out an equity loan or credit line if they have equity in their home. Equity is the difference between what is owed on the mortgage loan and the home’s current market value. In other words, if a borrower has paid down their mortgage loan to the point that the value of the home exceeds the outstanding loan balance, the homeowner can borrow a percentage of that difference or equity, generally up to 85% of a borrower’s equity.

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