 TITLE: Home Equity Loan vs. HELOC: What’s the Difference? CONTENT: Differences and Similarities Between a Home Equity Loan and a HELOC\n-------------------------------------------------------------------\nThe main difference between a home equity line of credit and a HELOC concerns the way you receive and repay what you borrow. Depending on the way you intend to use the borrowed funds, one or the other may be considerably more affordable in terms of interest charges.\nWith a home equity loan, you receive the full amount of your loan once the loan is approved, and you must repay it over a set number of fixed monthly payments. Repayment periods typically range from five to 10 years, but 20- and even 30-year terms are possible. The amount of interest you'll pay over the life of the loan is essentially known from the start; you may be able to save some interest by repaying the loan early, but some lenders charge penalties for paying loans off ahead of schedule.\nWith a HELOC, you can potentially save on interest charges if you keep your withdrawals relatively small and pay down your balances between expenditures.\nYou may be able to deduct interest payments on home equity lines of credit and HELOCs when you file your federal income taxes, just as you do primary mortgage interest charges. Through at least 2026, you may only deduct interest on home equity loans or HELOCs if the loan proceeds are used to make home improvements. Your total annual deduction on interest from all mortgage, home equity and HELOC loans cannot exceed $750,000. END