HELOC vs. HELOAN: Which Home Equity Option Is Right for You?

As home equity continues to rise, many homeowners are exploring ways to take advantage of what they’ve built up. Two of the most popular options are a Home Equity Line of Credit (HELOC) and a Home Equity Loan (HELOAN). While both allow you to tap into the value of your home, they work in different ways. Which option is right for you? The answer depends on your financial goals and how you plan to use the funds. Let’s dive into the details!

What is a HELOC?

A HELOC is a revolving line of credit that allows you to borrow money as you need it, up to an approved limit. It’s similar to a credit card, but it’s backed up by the equity in your home. HELOCs offer a variety of benefits, like:

• Flexibility: Borrow what you need when you need it, rather than receiving a lump sum upfront.
• Lower initial payments: Many HELOCs have interest-only payments during the draw period.
• Ongoing access: You can borrow, repay, and borrow again during the draw period, which typically lasts 5-10 years.

A HELOC is often a good choice if you’re tackling a long-term project, like a series of home improvements, or if you want access to a financial cushion for unexpected expenses.

What is a HELOAN?

A HELOAN is a fixed-rate loan that provides a one-time lump sum. You can repay it in equal monthly installments over a set term, similar to a traditional mortgage. HELOAN’s offer a different set of benefits, including:

• Predictability: Fixed interest rates and payments make it easy to budget.
• Large expenses upfront: Ideal for debt consolidation, tuition payments, or major purchases that require a specific amount of cash.
• Rate security: You lock in your rate from day one, avoiding future increases.

HELOANs are best for homeowners who know exactly how much they need and prefer the certainty of a fixed rate.

Home Equity Options from Spring EQ

At Spring EQ, we offer a range of home equity solutions designed to fit your financial needs. Our product lineup includes:

• Adjustable-rate HELOCs with interest-only payments and ongoing access to funds
• Fixed-rate HELOCs, which combine the flexibility of a HELOC with the predictability of a fixed interest rate
• Fixed-rate HELOANs with lump-sum funding and consistent payments
• Loan amounts up to $500,000
• Options available for primary residences, second homes, and investment properties

Whether you’re looking to consolidate high-interest debt, fund a major renovation, or simply unlock financial flexibility, Spring EQ has a home equity solution built to help.

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Please Note: Spring EQ does not provide tax, legal, investment or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, investment or accounting advice. You should consult your own tax, legal, investment and accounting advisors before engaging in any transaction.