Home Equity Loan - Does a home equity loan affect your credit?

Does a home equity loan affect your credit?

Just wondering if its better to refinance or take out a home equity line of credit as far as credit damage. Thanks!

A home equity line of credit (HELOC) can affect your score more negatively than a typical installment mortgage. The reason is because the amount of revolving debt can adversely affect your score... and a HELOC is revolving. Also, keep in mind from a economic standpoint, HELOC are based on short term rates, which are around 8.75-9%. A refinance mortgage could be as low as 6% or lower, depending on a bunch of variables, of course. For instance, if you currently have a 5.5% 1st mortgage, and want to take out a 9% 2nd mortgage... it would probably be smarter to get a 6.5% 1st mortgage - or even a 6.75% 1st mortgage. Consider both options with regard to the PURPOSE of the money, and weigh their pluses/minuses side by side.