 TITLE: What Is a Home Equity Line of Credit (HELOC)? CONTENT: What Are the Alternatives to a HELOC?\n-------------------------------------\nA HELOC is not your only option when you need to remodel your home or pay for other large expenses. Other alternatives to consider include:\n*   **Personal loans**: A personal loan doesn't require collateral, so unlike with a HELOC or home equity loan, you don't have to put your home on the line. While that's good news for your home, it also means personal loans have higher interest rates than home equity loans or HELOCs. As with any type of loan, you will receive the entire loan amount in a lump sum and make fixed monthly payments. Personal loans have shorter repayment periods than home equity loans, so they work best if you need to borrow a smaller amount of money. Find out more about the difference between a personal loan and line of credit.\n*   **Home equity loans**: Like a HELOC, a home equity loan (sometimes called a second mortgage) allows you to borrow against the equity in your home. While a HELOC is revolving credit, a home equity loan is an installment loan. You'll receive the entire amount of the loan in a lump sum and make fixed monthly payments over the life of the loan, which can be up to 30 years (just like a first mortgage). If you know exactly how much money you need, a home equity loan can be a better option than a HELOC because it offers a predictable repayment schedule and a fixed interest rate.\n*   **Cash-out refinancing**: If you have sufficient equity in your home, a cash-out refinance is another loan alternative that offers fixed interest rates, set monthly payments and a long loan term. A cash-out refi replaces your existing mortgage with a new, larger mortgage. You use the loan proceeds to pay off your original mortgage; then you receive whatever is left over as a lump sum in cash, which can be used for any purpose you choose.\nHomeowners with lower credit scores may find it easier to qualify for cash-out refinancing than for HELOCs or home equity loans. However, keep in mind that you're now on the hook for a whole new mortgage—not just a small loan. The new mortgage may have higher interest rates than your original mortgage or require you to have private mortgage insurance (PMI), which adds to your monthly costs of homeownership. In addition, you'll have to pay closing costs on the entire amount of the mortgage, making closing costs more expensive than for a HELOC or home equity loan. Carefully consider whether a cash-out refinancing will cost you more than it will benefit you in the long run. Read more about the pros and cons of cash-out refinancing. END