What's the difference between a HELOC and a home equity loan?

How are they different?

	Home equity loan	Traditional HELOC
How you get money	One lump sum at closing	A credit line; draw as needed
Rate	Fixed	Usually variable
Payment	Fixed principal and interest	Often interest-only at first, then jumps
Borrow again?	No	Yes, during the draw period
Best for	One known expense	Ongoing or uncertain costs

Both are second mortgages: they sit behind your first mortgage, and your first mortgage's rate and payment stay the same.

Where do the HELOCs you arrange fit?

In between, with the best of both:

• Fixed or variable rate: your choice.
• Principal and interest from day one: no interest-only period and no payment jump later.
• Flexibility: depending on the program, you may be able to draw more as you pay down the balance.

More on how they work: How does a HELOC work?

Which one should I choose?

• One project with a set price (a roof, a kitchen, paying off specific debts): a home equity loan or a fixed-rate HELOC.
• Costs spread over time (a remodel in phases, tuition each semester): a HELOC.
• Want a backup for emergencies: a HELOC, if the program lets you keep the line open without drawing it all.

Example scenario (illustrative)

A homeowner in Pueblo needs exactly $45,000 for a new roof and HVAC system. He takes a fixed-rate option with one lump sum and a set payoff date. His neighbor, planning a remodel in three phases over a year, chooses a HELOC so she only borrows (and pays interest on) each phase as the bills come in.

Our take

Don't get hung up on the labels. What matters is the rate type, the payment, and the fees. I'll show you the options that fit how you'll actually use the money.