Go to main content
Home > Borrow > Home > Mortgages & Home Equity > Home Equity Options

Home Equity Options

HELOC vs. Home Equity Loan

Home Equity Lines of Credit (HELOC) and Home Equity Loans are both types of home equity borrowing, with one major difference between them.

A HELOC is a revolving line of credit where the borrower can keep withdrawing money up to a pre-agreed credit limit, during the Draw Period. After the Draw Period, the balance is repaid (Repay Period).  

A Home Equity Loan is a term loan where the lender pays the borrower a lump sum and the borrower must pay it back over the term of the loan.

  1. Calculate your existing equity (the current value of your home, minus what you owe) and decide how much you need to borrow. 
  2. Gather the necessary documentation (such as W-2s, recent pay stubs, mortgage statement, home insurance policy) before you apply so the process will go smoothly.
  3. Read your disclosure documents carefully and ask the lender questions.
  4. Be aware that the underwriting process, though not as extensive as when you got your mortgage, can take weeks.
  5. Await loan closing, when you sign paperwork, and after the right of recission period, the loan funds or the line of credit becomes available.

HELOC vs. HEL vs. Personal/Secured Loan
DescriptionHELOCHome Equity LoanPersonal/Secured Loan
Rate Type Tied to Prime (+/-) Fixed or Adjustable Rate (ARM) Fixed
Pricing Structure Based on LTV and credit score Based on LTV and credit score Based on credit score
Payments Interest only, due 15th Principal & Interest, due 1st Principal & Interest, you pick due date
Draw/Repay Period Draw 10 yrs, Payback 10 yrs Term up to 30 yrs* Term up to 7yrs*
Grace Period 15 days 15 days 10 days
Annual Fee None None None
Pre-Pay Penalties None None None
Closing Cost Yes, up to $990** Yes, up to $990** $29.50
Max LTV 95% 100% 110%
* Subject to loan amount
** Request a loan estimate

Home Loan questions? We're happy to help!

Call or text us at (920) 684-0361 in Manitowoc or (920) 451-8222 in Sheboygan or email us at homeloans@UnitedOne.org.

Apply Now Mortgage Center Log In Local Home Loan Experts  Mortgage Rates Mortgage Calculators

Go to main navigation

This link leaves the United One website.