HELOC vs. home equity loan: Which is best for debt consolidation?

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Both options have major pros and cons to consider. Here's what to know now.

One positive development in the recent run-up of prices is that many homeowners now have substantially more equity. The average mortgage holder now holds $299,000 in equity, of which $193,000 is tappable, meaning they could borrow that much while still having 20% equity in their home.Having this equity can be valuable, such as if you want to put a large down payment on your next home. But it can also be helpful to use now, when used wisely.

C vs. home equity loan: Which is best for debt consolidation?Here's how to tell which option could be better for you when looking to consolidate your debt.When a C makes the most sense when you need flexibility in your borrowing. During the draw period, you can borrow against your available balance as needed, pay it down, and borrow again. In other words, you can borrow exactly the amount you need when you need it rather than taking out a lump sum loan,' says Leslie Tayne, founder and head attorney at Tayne Law Group.

C as bridge financing until you can find a loan with better terms, or perhaps you can soon pay off the full loan with cash. 'Some borrowers may elect to make the lower interest-only payments on a Cs can provide advantages in several situations, home equity loans are sometimes better for debt consolidation, such as when:You want to make progress on your debt payoff: One issue with

 

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