A home equity loan and a home equity line of credit are both low-interest financing options that borrow against the equity in your home; however, a home equity loan gives you a lump sum and a HELOC works more like a credit card (you have a certain amount of money to borrow and pay back, but you can take what you need as you need it). This fact, plus the variable interest rate, means your monthly minimum payment will fluctuate.
Conversely, home equity loans have fixed-interest rates. Because of this, they’re better suited for home renovations, paying down debt, and college expenses. HELOCS work best for minor home improvements, appliances, medical bills, and unexpected expenses.