Caught a segment on the news yesterday about more homeowners dipping into their home's equity lately. They were talking about two main ways people do it: HELOCs and home equity loans. Honestly, I never really thought much about the difference before, but apparently it matters quite a bit depending on your situation.
The reporter mentioned how HELOCs are kinda like credit cards—you borrow what you need, pay it back, borrow again, etc. But home equity loans are more straightforward, lump-sum deals with fixed payments. They interviewed some financial expert who said rising interest rates are making people rethink which one makes more sense right now.
I mean, I get the basics, but I'm still a bit fuzzy on when exactly one would be better than the other. Like, if you're planning a big renovation versus just wanting some emergency funds handy...you know? Curious if anyone else saw this or has thoughts on it.
We refinanced last year and went through this exact debate. If you're doing a big, one-time project (like our kitchen remodel), a home equity loan's fixed rate and predictable payments felt safer. HELOCs seem better for smaller, ongoing stuff...but that's just my two cents.
