Home equity loan vs. home equity line of credit

	Home Equity Line of Credit (HELOC)	Home Equity Loan (HEL)
What you get	Revolving credit, with a specific credit limit of up to 100 percent of the value of your home (its value minus all debts against it). Some lenders will allow you to borrow up to 125 percent of the value of your home.	A fixed amount of money, up to 100 percent of your equity in your home (its value minus your first mortgage debt and other debts). Some lenders will allow you to borrow up to 125 percent of the value of your home.
How to qualify	You typically need to provide proof of your income, home ownership, your mortgage and how much equity you have in your home. An appraisal is usually required as well.	You typically need to provide proof of your income and home ownership, and proof that at least 20 percent of the value of your home is paid off. An appraisal is usually required as well.
How you repay it	Minimum payments (as little as interest only) each month; eventually you have to repay the entire sum borrowed plus interest.	Fixed payments of interest and principal over a fixed period of time.
How long it lasts	You have a 10- to 20-year period when you can draw on the line (up to the credit limit), after which you have a fixed period to pay off the outstanding balance plus interest.	The term of the mortgage can be as short as a year or as long as 30 years.
Costs and fees	Usually no closing costs, but may have an annual fee.	Closing costs that are lower than for a first mortgage.
How you receive the money	You draw funds as needed, typically using special checks.	You receive one up-front lump sum.
Interest rate	The prime interest rate plus a margin (which can vary from one institution to another).	A fixed or adjustable interest rate.
Tax status	Interest may be tax-deductible (consult a tax advisor).	Interest may be tax-deductible (consult a tax advisor).