I want to renovate. What's the difference between a home equity line of credit and a cash-out refinancing?
A HELOC or Home Equity Line of Credit is usually an adjustable rate second mortgage loan for a specified amount. You can draw against the entire line of credit at once or just a portion of it. You draw against the line by using a lender issued credit card or by writing a lender issued convenience check. The amount of your payment and interest is calculated based upon the amount you have borrowed. As you repay the amount you've borrowed the amount of credit you can access is restored. A cash-out refinance is a mortgage that refinances your exisiting mortgage. It can be a fixed rate or adjustable rate loan which repays your first mortgage and allows you to borrow against the equity in your home and obtain that equity in the form of cash.