The home equity loans fall into two categories.

The first type is a term or closed end loan and another is a typically a line of credit. Many people choose to describe them as a second mortgage as they are secured against your home just like your primary home loan. Usually these loans have repayment duration of 5-15 years.

The term loan is a one-time lump sum payment that should be repaid over a pre-determined duration. It carries a fixed interest rate that lets you pay the same loan installment every month. Once you get the loan, you cannot take further loan.

A home equity loan line of credit operates similar to a credit card. You can borrow up to a specific limit during the duration of the loan. The time limit is generally decided by the institution lending the amount. Within that time frame you can borrow money as per your necessity to pay for things that you require. As you go about repaying the principal, your credit revolves, allowing you to borrow again if necessary. Credit line is more flexible than a term home equity loan.

The selection of home equity loan should be done based on your specific condition. To help you make the decision, answer certain questions like the amount of money you will require, the duration of requirement of the loan, the time needed to repay the loan and the maximum monthly payment you can make.