Home equity installment loans and home equity lines of credit (HELOCs) can be great options for borrowing. With a home equity installment loan, funds are received in a lump sum and paid back over a set period of time. A HELOC, on the other hand, lets you borrow money as you need it and in the amount you need up to a pre-determined limit. In addition, with HELOCs, there’s more flexibility in how much, and how fast, you pay off the balance.

Uses for a home equity loan vs. a home equity line of credit

A home equity installment loan is ideal if you want a large lump sum of cash for a one-time expense, such as a kitchen remodel, or if you want to consolidate debt. A home equity line of credit may be perfect if your expenses will be staggered over a period of time, such as your child’s college tuition or a larger-scale home improvement project that will take several months or years. HELOCs also are useful to have available in case of home repair, medical expenses or some other unexpected event.

Terms for a home equity loan vs. a home equity line of credit

Home equity financing is a low-cost option because there are no closing costs for installment loans or lines of credit. Rates for an installment loan may be marginally higher than for a credit line but the term also is usually longer, so your monthly payments may be similar for both. A HELOC has a variable interest rate based on the Wall Street Journal Prime Rate as published in the Money Rates section. One benefit of a HELOC is that you are only charged interest on the amounts withdrawn against the credit line.

Another HELOC feature to consider

You can lock in your interest rate on balances or new draws with the Fixed Rate Option. When you lock a rate, you’ll have peace of mind knowing the rate will not increase.

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Disclosures

U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

The Consumer Pricing Information disclosure lists fees, terms and conditions that apply to U.S. Bank personal checking and savings accounts and can be obtained by visiting a branch or calling 800-872-2657.

Home Equity Line of Credit: The Annual Percentage Rate (APR) is variable and is based upon an index plus a margin. The APR will vary with Prime Rate (the index) as published in the Wall Street Journal. As of November 8, 2024, the variable rate for Home Equity Lines of Credit ranged from 8.20% APR to 11.85% APR. Rates may vary due to a change in the Prime Rate, a credit limit below $50,000, a loan-to-value (LTV) above 60% and/or a credit score less than 730. A U.S. Bank personal checking account is required to receive the lowest rate, but is not required for loan approval. Clients in certain states are eligible to receive the preferred rate without having a U.S. Bank personal checking account. The rate will never exceed 18% APR, or applicable state law, or below 3.25% APR. Choosing an interest-only repayment may cause your monthly payment to increase, possibly substantially, once your credit line transitions into the repayment period. Repayment options may vary based on credit qualifications. Interest-only repayment may be unavailable. Loans are subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Credit line may be reduced or additional extensions of credit limited if certain circumstances occur.

An early closure fee of 1% of the original line amount, maximum $500, will apply if the line is paid off and closed within the first 30 months. Property insurance is required. Other restrictions may apply. An annual fee of up to $75 may apply after the first year and is waived or discounted with an existing U.S. Bank Platinum Checking Package or with enrollment in our Smart Rewards Program. Annual fees are assessed based on the tier in our Smart Rewards Program on your HELOC anniversary date. Please refer to your Smart Rewards terms and conditions for more information on tier assignment.

Home Equity Loan: In order to receive the lowest rate advertised, a set-up of automatic payments from a U.S. Bank personal checking or savings account is required but neither are required for loan approval. Customers in certain states are eligible to receive the preferred rate without having automatic payments from a U.S. Bank personal checking or savings account. Home equity loans not available for properties held in a trust in the states of Hawaii, Louisiana, New York, Oklahoma and Rhode Island. Loans are subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Property insurance is required. Other restrictions may apply.

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.