How does a home equity loan differ from a HELOC?

A home equity loan gives you a lump sum of money upfront with a fixed interest rate and fixed monthly payments over a set term, typically 5 to 30 years. You know exactly what you owe each month from the start. A HELOC, or home equity line of credit, works more like a credit card. You get a revolving credit line you can draw from as needed during a draw period, usually 10 years, and you only pay interest on what you borrow. The interest rate is typically variable, so payments can fluctuate. After the draw period ends, you enter a repayment period. A HELOC offers more flexibility, while a home equity loan is better for one-time large expenses.