Home Equity Loans vs HELOCs: Which Is Right for You?
Your home is likely the most valuable asset you own, and over time, as you pay down your mortgage and property values rise, you build equity — the difference between what your home is worth and what you still owe. Two of the most common ways to tap that equity are home equity loans and home equity lines of credit (HELOCs). They sound similar, and both use your home as collateral, but they work in fundamentally different ways. Think of it like this: a home equity loan is like withdrawing a fixed sum from your savings account, while a HELOC is more like having a credit card backed by your house. With the Federal Funds rate at 3.64% as of February 2026 and the prime rate sitting at 6.75%, understanding how each product is priced — and which one fits your situation — can save you thousands of dollars over the life of the loan.