Home equity loans use the amount of equity you have in your home and disperse it to you as a second mortgage all at once. The rate is fixed and there are a specific number of payments laid out to you. When you take out a home equity loan you absorb all of the equity in your home at once and can do with it as you please. Home equity loans are a great idea for home improvements, college funding, or any other large expenses you may need to take care of.
Unlike a standard home equity loan, a home equity line of credit (HELOC) works similar to a credit card. Once you have determined how much equity you have in your home you are able to take as much or as little of that amount as you would like, pay it off and draw upon it again if you need to. The rates on HELOC aren?t fixed and you don?t have a specific loan drawn up with set amounts because it is dependant on how much you borrow each time. HELOC are beneficial to those who may want to have access to a large lump sum of money but don?t necessarily have a spending plan in mind. Many use a HELOC to consolidate debt or to take care of a large plumbing problem or other expensive mishap, pay off the amount and have the line of credit there for another future situation if needed. Taking out a HELOC is better than getting a standard home equity loan in these cases because you would only pay interest on the amount you need saving you money in the long run.
Home equity loans are a great resource to explore if you need the money now or in the future.
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Source: http://www.story-of-finance.com/exploring-home-equity-loans.html
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