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Loans and lines of credit: how ANBTX can help you use your home equity

Is there something in your life that you want that requires a large sum of money? Perhaps you’re planning on remodeling your home, going on a vacation, purchasing a new car, planning a wedding or scheduling plastic surgery. Both of these loan types are good options for gaining access to the money you need.

So what’s the difference between a Home Equity Loan and a Home Equity Line of Credit?

A Home Equity Loan and a Home Equity Line of Credit (HELOC) are similar in the fact that they are both types of home loans. Besides that similarity, they have many differences.

Home Equity Loan
  • You receive a lump sum at once
  • The loan is paid back in monthly payments over a fixed length of time
  • The interest rate is usually fixed

Home Equity Line of Credit
  • You draw the amount of money you need (up to the line of credit amount) when you need it. There is a minimum draw of $4,000.
  • You make no payments until you draw money from the line of credit and only pay interest on the amount borrowed.
  • Once you draw money from the line of credit you make monthly payments to repay the loan.
  • The line of credit is revolving, meaning as you pay it off, the money becomes available to use again.
  • Home Equity Lines of Credit generally have adjustable interest rates.

But why not just use a credit card? There are many advantages to Home Equity Loans and HELOCs over credit cards.
  • You can access a larger sum of money. Home Equity Loans often give you access to up to 80% of your home’s value and HELOC’s up to 50% of your home’s value, minus the amount you owe on your mortgage. It is difficult for many people to get that amount of money from a credit card.
  • They usually offer much lower interest rates that credit cards do.
  • They allow you to access all of the money as cash, whereas credit cards usually limit the amount of cash you can pull and charge higher interest rates on cash advances.

So which option should you choose? If you need to access a large sum of money all at one time, a Home Equity Loan is likely the best choice because it generally has a lower interest rate than a HELOC. If you want the flexibility of a revolving line of credit that you can use when any time you need it, multiple times, a HELOC is your best choice. HELOCs often have higher interest rates than home equity loan, but typically lower interest rates than credit cards.

Getting approved for a home equity loan or HELOC is a quick process. Make your dreams a reality by getting a home equity loan or a home equity line of credit from ANBTX. Give us a call today and get started on making your dreams come true. You deserve it!


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