The National Directory of Certified Public Accountants

Ask A CPA - Mortgages & Loans

What Is The Difference Between A Home Equity Line Of Credit And A Home Equity Loan ?

A home equity line of credit is a specific line of credit that you apply for and then can reuse at your discretion. The equity in your house is used as collateral. Interest expense is calculated on the outstanding balance, not the maximum credit line negotiated. Generally, the interest expense is deductible as mortgage interest as a itemized deduction on IRS Schedule A. A home equity loan is a total amount negotiated with the bank. Generally, the interest expense is deductible as mortgage interest as a itemized deduction on IRS Schedule A.

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