In past years, I’ve argued that a home equity line of credit is generally a smarter choice than a home equity loan. Lines of credit allow borrowers to withdraw money only when they need it and pay interest only when the money is withdrawn. Pay down the line and stop paying interest.

However, now that banks are freezing home equity lines, some borrowers may feel safer taking out a home equity loan. These loans disburse a flat sum of money and are unlikely to be called due. Although home equity loans tend to have more expensive closing costs, the peace of mind may be worth it.

For a more extensive comparison of these two options see: Home Equity Loan vs. Home Equity Line of Credit

Tags | Heloc, heloc freeze, home equity line of credit, home equity loan