Fixed vs. variable home equity rates

You get one lump sum at closing. Your rate is set when you lock and doesn't change. You repay with the same principal and interest payment each month until the loan is paid off.

A CapCenter home equity loan has a fixed rate for 15, 20 or 30 years, with loan amounts from $50,000 to $250,000. Your first mortgage stays as is.

A HELOC is a revolving line of credit. You draw what you need, when you need it, up to a limit. Its rate usually moves with the prime rate, so your payment can go up or down.

Many HELOCs have a draw period, often around 10 years, when you may pay only interest. After that, the repayment period begins and you pay back principal too. The payment can jump at that point, even if rates haven't changed.

• Rate: fixed for a home equity loan; usually variable for a HELOC.
• Payment: the same each month, or one that changes with rates and the draw period.
• Funds: one lump sum, or draws as you go.
• Interest: on the full amount from day one, or only on what you've drawn.
• Best for: a known, one-time cost, or ongoing costs that are hard to predict.

• You know how much you need, like a remodel with a firm bid.
• You're consolidating debt and want one steady payment.
• A rising payment would strain your budget.
• You plan to keep the loan for many years.

• You need money in stages and aren't sure of the total.
• You expect to pay the balance off quickly.
• You can absorb a higher payment if rates go up.

With a variable rate, you take on the risk that rates rise. With a fixed rate, the lender takes on that risk, which is one reason fixed rates can start higher than a HELOC's first rate. Some HELOCs have caps on how high the rate can go. Read the terms before you sign.

HELOCs often come with appraisal, origination or annual fees, depending on the lender. CapCenter home equity loans come with ZERO Closing Costs (restrictions apply; see Offer details). Compare the full cost of each, not just the starting rate.