Before you apply for a home equity loan, first decide if a fixed-rate Home Equity Loan (HEL) or a variable-rate Home Equity Line of Credit (HELOC) will better suit your needs. While a home equity loan offers you a fixed interest rate for a specific amount to be repaid over a specified period of time, a home equity line of credit is more flexible – you can borrow what you need up to your approved credit amount at a variable rate that can adjust.

Since both are secured by the collateral in your home, there are specific questions you will want answered before you apply:

Annual Percentage Rate (APR) Is the rate fixed or variable? What is the actual APR once the introductory period ends, if any? How often can the rate adjust?

Cap What is the maximum rate amount your loan can increase annually? During its lifetime?

Closing costs How much do fees and other closing costs add to the Annual Percentage Rate (APR)?

Conversion Does your adjustable loan allow you to convert to a fixed rate? If so, how many conversions are allowed and is there a conversion fee?

Draw period How long will the money be available to use? Fees Are any of the fees due upfront, refundable, or built into the costs of the loan?

Index What is the index used to calculate your HELOC rate and how often does it change?

Margin How many percentage points are added to the index to determine your adjustable HELOC rate?

Pre-payment penalty Are there any fees should I decide to pay my loan off early?

Relationship Banking Benefits Are there any benefits if I have my checking, savings, and home equity loan accounts at the same institution?

Repayment period Is there a balloon payment due at the end of the loan period, or do I have an additional period of time to repay the loan?

Transaction fee Is there a transaction fee for accessing your HELOC?

Withdrawal amount Is there a minimum amount you have to withdraw each time you access your HELOC?