A traditional open HELOC, unlike a closed-ended HELOC, offers a revolving line of credit secured by the equity in your home. With a traditional HELOC, you have the flexibility to borrow funds as needed, repay them, and borrow again, similar to a credit card.
On the other hand, a closed-ended HELOC provides a lump sum of money upfront, secured by your home's equity. This fixed amount is repaid over time with regular monthly payments, often at a fixed interest rate. Closed-ended HELOCs are ideal for specific financial needs, such as funding a large purchase, home renovations, or debt consolidation, without the need to refinance your primary mortgage.
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