Home Equity Line of Credit in Orange County

The equity of your home can be used as a secure loan to finance large expenses. Since the loan is considered secured, the interest rate you are borrowing money will be lower than an unsecure loan.

A home equity line of credit, also referred to as a HELOC, operates like a credit card with a limit. The main difference is if you don't pay back the loan, the bank will be able to foreclose on your home since the loan is secure against the equity of your home.

The home equity line of credit loan can be fixed rate or an adjustable rate. With today's interest rates historically low, try to lock in your rate with a fixed rate if possible. Most banks only offer adjustable rates on home equity lines of credit. Often they the rates are advertised as, "Prime +.25%" or "Prime -.5%" depending on the bank. The prime rate is the rate that the feds charge the banks to borrow money from. The "+.25%" is the additional rate you must pay to the bank. Look for fine prints for special rate offers because often the banks will advertise low rates but only for an initial period of time such as the first 3 or 6 months.

Differences Between Home Equity Loan and Home Equity Line of Credit
The main difference between the two ways of borrowing money is that a home equity loan often forces you to take out a large sum of money when you take out the loan while a home equity line of credit operates more like a checking account where you can write checks for to pay certain bills. Both loans are considered secure loans and offer similiar interest rates.