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HELOC Vs Home Equity Loan: How Do They Work?

Savings Corner

Key takeaways Home equity loans and HELOCs are both financing tools that allow you to borrow against your ownership stake in your home. Both act as second mortgages, using your home as collateral, and may offer tax deductions if the funds are used for substantial repairs or upgrades.

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What Is A Home Equity Loan?

Savings Corner

The amount you can borrow with a home equity loan is based on the current market value of your home, the size of your mortgage and personal financials like your credit score and income. Home equity loans drawbacks include putting your home at risk of foreclosure and their lengthy application process.

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