Comparing Home Equity Loans and Lines of Credit
Both home equity loans and lines of credit are secured by your home, and are usually in second lien position behind a first mortgage. Since these types of credit are tied to real property the interest paid may be tax deductible.*
Home equity loans provide money for what you need now. The rate and payments are fixed so there are no surprises. You receive the total amount of the loan at time of closing, and make payments over the agreed upon term, 10 or 15 years. There are no recurring fees on home equity loans. There is a prepayment premium if the loan is closed within the first 36 months.
Home equity lines of credit provide funds for your current and future needs. You access the funds as you need them, and pay interest only on the amount in use. You can draw funds up to the approved amount at any time during the first 10 years. Required payments during the draw period are interest only with the rate tied to Wall Street Journal prime. After 10 years, you pay monthly principal and interest with a maximum repayment period of up to 15 years to fully pay the loan. There is a $50 annual fee (waived the first year) and a cancellation fee if the line of credit is closed within the first 36 months. This type of loan is similar in many ways to a credit card and often provides a reserve for emergencies.
More Information:
For more information visit your local HomeStreet Bank branch or contact our customer service department at 800-809-1377.
*Please consult with your tax advisor regarding deductibility of interest.
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