It has an adjustable interest rate that can change on a monthly basis. During the draw period, you have the option of interest only payments, or fully amortized. At the end of the draw period of usually 10 years, the loan converts to a fully amortized 15 or 20 year term. A home equity loan is a fixed rate, fully amortized, simple interest loan, with monthly payments that remain the same for the term of the loan. A fixed rate home equity loan will usually allows for higher loan to value limits, and higher loan amounts.
Loans are available for owner-occupied single family homes, condominiums and townhouses.
Either type of loan can be tax deductible, because the loan is secured by your home, the interest portion may be tax deductible up to the full value of your home. Consult with your tax advisor.