Frequently Asked Questions (FAQ)

This can be confusing to most because both Home Equity Loans and Home Equity Lines of Credit share some similarities, such as:

• Both loans are secured by the equity the borrower owns in his/her home.
• Both loans may be referred to as a second mortgage.
• Both loans’ interest may be tax-deductible (consult your tax adviser).

Home Equity Loan

• A fixed amount of money based on your home’s equity.
• A fixed rate of interest over a fixed amount of time.
• Single lump-sum distribution of the money with no option for the borrower to obtain additional funds.

Home Equity Line of Credit

• A revolving credit limit based on your home’s equity.
• The option to draw money at any time as well as multiple times, over a predefined time period.
• The ability to draw money in any increments.
• As soon as the principal is paid, the funds are instantly available for use again.
• A variable rate of interest that may fluctuate over the life of the loan.