Understanding Your Home Equity Options

Understanding the basics of a Home Equity Line of Credit (HELOC) and a Fixed Rate Home Equity Loan can give you confidence in choosing the one that's right for you. We'll explain the differences and benefits of each option.

Home Equity Line of Credit (HELOC)

A HELOC uses your home as collateral for a line of credit that you can access as needed. There are 2 types of HELOCs, a HELOC with a principal and interest draw period or a HELOC with an interest-only draw period. The latter option has asset eligibility requirements. With both options, you'll be approved for a specific line amount to draw from multiple times, up to your available credit limit.

The HELOC includes 2 phases:

  • The draw period, when you can access your funds
  • The repayment period, when you repay the outstanding balance at the end of your draw period

Because a HELOC is flexible and usually has a higher limit, it's generally used to pay for large items like tuition or home improvements rather than day-to-day expenses. Some homeowners also use a HELOC to consolidate higher-interest-rate debt.

A HELOC may be the right choice if you:

  • Have built up equity in your home
  • Prefer to withdraw money as you need it
  • Want to borrow between $10,000 and $1,000,000

Fixed Rate Home Equity Loan

A Fixed Rate Home Equity Loan provides a set amount of money that you repay in equal monthly principal and interest (P&I) payments over a fixed time period.

If you have a balance on your existing mortgage, Citi offers Fixed Rate Home Equity Loans with 5, 10, 15, 20, 25, and 30-year terms.

This loan could be a good fit if you prefer consistent monthly payments for a longer amount of time, or if you need a certain amount for a specific purpose like paying for tuition or home renovations.

A Fixed Rate Home Equity Loan may be the right choice if you:

  • Have a balance on your existing mortgage
  • Prefer to have set monthly payments over a set term
  • Have a large, one-time borrowing need
  • Want to borrow between $25,000 and $300,000