The 30-second answer, full feature matrix, real scenarios where each one wins. For the conversation with the past client who is figuring out which one fits.
Your past client wants to draw on their home's equity. They've heard "home equity loan" and "HELOC" and don't know which one to ask for. The answer depends on the work.
Home equity loan: one lump sum, fixed rate, predictable payment. Right when the cost is known.
HELOC: credit line drawn over time, variable rate. Right when costs are staged or unpredictable.
Equity loan when the amount is known and predictability matters. HELOC when the amount is variable and flexibility matters. The longer answer takes longer, but the short answer is right most of the time.
Known amount + fixed budget → Equity Loan.
Unknown total + spend over time → HELOC.
Four real-world borrower situations. Same borrower could go either way on some of them. Here's how we'd structure each.
| Feature | Equity Loan | HELOC |
|---|---|---|
| Structure | Lump sum, second lien | Revolving credit line, second lien |
| Rate | Fixed | Variable (Prime + margin) |
| Payment | Predictable monthly | Interest-only during draw period |
| Term | 10-30 years | 10-year draw, 20-year repayment |
| Closing costs | $1,000-$3,000 typical | Often minimal or zero |
| Funding speed | 2-3 weeks | 2-4 weeks |
| Best use | Known one-time expense | Variable or recurring expenses |
| Tax deductibility | Interest deductible if used for home improvements (consult a CPA) | Same rule applies |
| Risk | Fixed-payment certainty | Variable rate exposure |
This is a reference, not legal or tax advice. Tax deductibility of equity-product interest depends on how the funds are used and individual tax circumstances. Borrowers should consult a CPA before assuming a deduction.
Working with the studio means working with Geoffrey. Phone goes to a phone. Email goes to an inbox that gets read. The file is worked by the same loan officer from application to closing.
