Finimpact

Frequently Asked Questions (FAQ)

When is a home equity loan better than a home equity line of credit (HELOC)?
A home equity loan is typically better than a HELOC when you’re on a budget, don’t want any changes in your monthly payment, and when you don’t need additional available funds over time. It’s usually a more conservative option than a HELOC and offers the security that your recurring payments and interest rates will remain the same.
When is a HELOC better than a home equity loan?
A HELOC is better than a home equity loan when you need ongoing capital and want to take it out only as you need it. It’s ideal for real estate investors doing renovations to their properties or working on projects over time. It’s best for those who don’t mind fluctuating rates and varying payments in return for flexibility and a long draw period.
Which gets me money faster: a HELOC or a home equity loan?
The time to get your money depends on a variety of factors including the lender, how fast the borrower provides the documents, how busy the company is funding the deal, and how long the appraisal takes. Typically, a home equity loan gets your money faster than a HELOC. You can expect to have your money with a home equity loan in about two to four weeks.
What are the requirements for a HELOC or a home equity loan?
Requirements for a HELOC and a home equity loan vary from lender to lender. However, they usually include a certain amount of equity in the home as well as specific buyer criteria. A minimum credit score is usually required, as is a set debt-to-income ratio, employment history, and verifiable income.
Can you have a HELOC and a home equity loan?
Technically, yes, you can have a HELOC and a home equity loan if enough equity is available in your home and if you meet the other borrower qualifications. Remember that each loan you take out has to be repaid and it taps into a portion of your home’s equity. So, the more loans you have, the less equity is available to be borrowers against.

Conclusion

Take your time choosing between a Heloc vs home equity loan and consider which one is best suited for your needs. Compare funding times, rates, loan criteria, and qualifications, as well as closing costs. Know what you need the money for and how the loan product can best serve you. Check out Lendio for their variety of commercial loans. They offer short and long-term loans with streamlined applications and fast funding times.

About the Authors

Allison Bethell

Written by: Allison Bethell

Real Estate Expert

Allison Bethell is a content writer, real estate investor, small business owner, and consultant. She has a B.A. from Villanova University in Sociology and Business. She also holds several graduate certificates in early childhood development, screenwriting, and contract law.

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Kal Salem

Reviewed by: Kal Salem

CPA, PMP and Finance Consultant

A CPA and finance professional working with small businesses to educate owners and grow alongside their businesses. He holds a Masters in Accounting and a BS in Supply Chain Management. Owner at Salem CPA Services LLC.

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Somer G. Anderson, Ph.D.

Fact checked by: Somer G. Anderson Ph.D., CPA

Accounting and Finance Professor

Somer G. Anderson has been working in the Accounting and Finance industries for over 20 years as a financial statement auditor, a finance manager in a large healthcare organization, and a Finance and Accounting professor at Maryville University.

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