People often see home loans as an option when they are in need of financial support or when they have a bad credit ahead of them. Let us first discuss the two types of home loans a person can apply for – home equity loans and home equity line of credit (HELOC).
1. Home equity loans – Just like a regular loan, a home equity loan is a type of loan wherein a borrower uses the equity of his/her home as collateral. The borrower is given the complete amount of loan which he/she would later pay back in an installment basis. It is a one-time lump sum loan that usually has a fixed interest rate.
2. Home equity line of credit (HELOC) – With this type of loan, a borrower is given a line of credit, (similar to a credit card), instead of being given the whole amount of loan.
Read more How to Borrow a Home Loan Wisely
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