If you have a credit line of $30,000 and you use $12,000, then you pay interest on $12,000 and you have a remaining balance of $18,000 available at any time.

Home Equity Line of credit is great for emergencies If you should experience a sudden job loss, an accident, or any other type of emergency where your salary is in jeopardy but you will need a loan, you can still have access to your home equity line of credit. It does not require a new loan application and can give you same great rates as a home equity loan.

The interest rate on your credit line will vary based on amount that you have used and credit terms established by your lender.

So how do you decide which one is better?

Take an objective look at your finances. If it looks like you need a one time loan to reduce your debt, then a home equity loan is a good choice. If it looks like your will have periods where you will need more cash that you an get on your credit card, then a home equity line of credit might be your best option.

However, Interest Only Mortgage is not for everyone. · Beware a potential prepayment penalty for first 1-3 years imposed by some lenders. · You have to play “catch up game” once you begin to pay principal. The amount is much more since you didn’t pay during interest only payment years. · Think twice before committing to an Interest Only Mortgage if it’s only way for you to afford a house.