Published February 1, 2021

Key Takeaways

  • A HELOAN is a single lump sum loan paid back over time

  • A HELOC works like a credit card where you only charge what you need

What’s the difference between a HELOC and a Home Equity Loan?

A Home Equity Loan (HELOAN) is going to be a set about of money that you take out at one point in time & you’re going to pay principle and interest on those funds. You're not going to have access to the funds over and over again like you can with a Home Equity Line of Credit (HELOC). A line of credit is also going to save you money because a lot of people don't know exactly how much they need and how much they want to utilize. With a HELOC you can take out just what you need a little at a time & only pay interest on that amount. That will save you a lot of money in the long run. You can have up to ten years to access that line of credit over and over again. This gives you the felxibility to easily access funding when new financial needs arise.

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*Fixed rate home equity line of credit: Loan has a draw period of 10 years, followed by a repayment period. Interest only payments during the 10-year draw period and will be re-amortized at the time the repayment period begins. If interest only payments are made during the draw period, the loan balance will not decrease.

Variable rate home equity line of credit: Credit Union of Texas offers a variable Annual Percentage Rate (APR) based on the Prime Rate as published in the Money Rates section of The Wall Street Journal (the “Index”) plus a margin based on creditworthiness and credit limit. As of September 22, 2022, the index value is 6.25% . The floor APR will be 3.00%. An increase in the Index will result in an increase in the periodic rate which, in turn, will result in higher payments. In no event, will the APR increase by more than 18% or the maximum rate allowed by applicable law.

Offer is limited to consumer Home Equity Lines of Credit (HELOCs) not currently held at Credit Union of Texas. Property insurance is required, including flood insurance where applicable. The minimum advance during the draw period is $4,000. No closing costs on loans up to $400,000. If, however, an appraisal or a policy of title insurance is required, applicant is responsible for those costs. Texas homestead properties are limited to 80% combined loan to fair market value for home equity financing. All loans are subject to credit approval and Credit Union of Texas lending policies. Other restrictions may apply. In Texas, there is a 12-day cooling off period on all HELOCs. There is also a three-day right of rescission after closing before the funds may be disbursed. Actual time of funding may differ depending on appraisal, title and other underwriting requirements. This is a limited time offer and is subject to change at any time without notice. The account is subject to application, credit qualification, and income verification; additional evaluation and verification criteria may apply. CUTX home loan programs are only available in Texas. Credit Union of Texas NMLS #576560. Membership required.