Ideally, you want to use a home equity loan when you have a large expense that requires a lot of money up front. Meanwhile, a HELOC is better for ongoing expenses like a new baby or financing a college education.

The second consideration when deciding between an equity loan and a line of credit are your monthly payments. Typically, home equity loans offer a fixed rate of interest and a steady monthly payment that’s predictable. A home equity line of credit normally uses an adjustable interest rate that can go up and down with the changing market. So, if you prefer the stability of a steady rate, a home equity loan may be the better option for you.

Finally, always remember that any kind of home-based financing requires you to use your home as collateral. This means if you’re late with payments or wind up not being able to make them, you could lose your home. Despite those risks, home equity loans still remain a popular form of financing, especially in Florida.

Before you sign for a home equity loan or HELOC, always shop around for a good interest rate, clear terms and a lender that can provide you with excellent customer service for the full duration of your loan.