A fixed-rate lump sum from your home equity
Get the full amount upfront with predictable monthly payments that never change. A home equity loan is the straightforward way to fund large, planned expenses \u2014 one disbursement, one fixed rate, one simple payment.
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Home equity loan vs HELOC
Both tap your home equity, but they work very differently. Here is how they compare.
| Feature | Home Equity Loan | HELOC |
|---|---|---|
| How funds work | One-time lump sum at closing | Revolving credit line — draw as needed |
| Rate type | Fixed for the life of the loan | Typically variable (some fixed options) |
| Payment | Fixed principal + interest every month | Interest-only during draw period, then P+I |
| Flexibility | Single disbursement — no re-borrowing | Borrow, repay, and borrow again |
| Best for | Large, planned one-time expenses | Ongoing or unpredictable expenses |
| Tax deductible | If used for home improvements * | If used for home improvements * |
* Consult a tax advisor regarding the deductibility of interest.
When a home equity loan makes sense
Large one-time expense
A kitchen remodel, roof replacement, or pool installation where you know the full cost upfront and need all the funds at once.
Debt consolidation with a fixed payoff date
Roll high-interest credit card balances into one fixed payment. You will know exactly when the debt is paid off and how much you will pay in total.
Known budget with no unknowns
When the project scope is final and the contractor has given you a firm bid, a lump sum matches a fixed budget perfectly.
Prefer predictable payments
If rate fluctuations keep you up at night, a fixed-rate home equity loan means the same payment from month one to the last.
How payments work
With a home equity loan, every payment includes both principal and interest at a fixed rate. Your balance decreases with every payment, and you know the exact payoff date from day one.
Example: $50,000 at 7.5% for 15 years
The HELOC payment looks lower, but the principal balance does not decrease during the interest-only draw period. When the draw period ends, the HELOC payment jumps because you must begin repaying principal.
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