Home equity loans and lines of credit, what is the difference?

Wondered the difference between a mortgage, line of credit? Both allow you to borrow money using your home equity as collateral and is often referred to as second mortgages. Despite its appearance, and highlights the key differences below.

Mortgage Loans:

Home Equity Loan is a lump sum of a single currency with a fixed interest rate and term. The payment of principal and compound interest, and the term is 15 years but can be as short as 5 years and while 30th

Lines of credit home equity (HELOC):

Installation is similar to a credit card because your credit line that can be used to convert the money into a period of time. A variable rate loan, which is the margin and index. Is selected, the range of factors such as credit scores and equity in the house and the size of your loan. The two most commonly used indices are the Prime Minister and the LIBOR rate. If you add to your line, you get the interest rate. And they usually pay fixed interest rate, but this term is usually a balloon 10 or 15 years. Equity lines of credit are given more flexibility than can continue to count on the line at the time of their costs. Your payments are generally lower than the interest, but it also means staying longer in debt. With home equity loans, there is usually a premium for the security of a fixed interest rate is set. Although you and higher payments, you know what to expect every month fixed for payment and paid both principal and interest.