When is an equity line of credit preferable to a home improvement loan?

For most people a home improvement loan works better than an equity line of credit because everything is broken down evenly, and they know what to expect in monthly payments. However, if you are doing home improvements yourself, an equity line of credit may work better for you. These loans work like a credit card in that you are given a maximum amount you can spend, and your monthly payments are based upon your outstanding balance rather than the maximum funds you can use. If you are planning to spread your project out over time, an equity line of credit may work better for you than a loan with a fixed funding amount. Since you will only be using a portion of the available funds at one time, you will only pay interest and payments based upon the outstanding balance. For those who prefer to do their own home improvements, this provides the money that is necessary for materials. For those who plan to hire a contractor to do their home improvements, a loan is likely to be the preferred ...  more