A HELOC (Home Equity Line of Credit) and HELOAN (Home Equity Loan) are both types of mortgage loans that allow homeowners to borrow against the equity in their homes.
HELOC: A HELOC is a revolving line of credit that lets homeowners borrow funds as needed, up to a predetermined credit limit. They can access funds multiple times during the draw period, usually around 5-10 years, and repay the borrowed amount plus interest.
HELOAN: A HELOAN, also known as a home equity loan or second mortgage, provides a lump sum loan amount upfront, typically with a fixed interest rate and repayment term. Borrowers receive the entire loan amount at once and repay it over time in regular installments.
Both HELOCs and HELOANs use the home as collateral and can be used for various purposes, such as home improvements, debt consolidation, or major expenses.