Difference between HELOC and home equity loans?

[Jeffrey L Evans]

Hello all, 

I need to arrange some money for my ongoing business. While searching for a way to raise fund for the business, I got to know that there are financial institutions that offer credit and loans based on home equity. I have never tried for home equity loans in my life. You can say that I am a total newbie when it comes to this subject. I got to know about home equity loans through a friend. But, she recommended me someone who offers home equity loans in New Jersey . but, before going with the process of applying for a home equality loan, I would like to know more about this service. So, I decided to ask you guys here about it. Can someone please help me to understand what is the difference between HELOC and home equity loans? Which is better for businesses? Are there any other financial services that are better and available to existing businesses? What should I keep in mind while applying for a home equity loan?

[Brian Ellis]

A home equity loan is typically have a fixed interest rate, with a principle and interest payment due at the end of each billing cycle. A Home Equity line of Credit (HELOC), is an adjustable rate, meaning it goes up and down with the current interest rate, and it only requires an interest only payment. So Basically a HELOC is a giant credit card. Usually after 10 years though you would have to pay a principle and interest payment on whatever the balance is.

HELOCs are good because when you pay the principle down, and you can utilize those same funds again.