When deciding whether to take out an equity line or a home loan, CNNMoney advises consumers to consider their goals, payment schedule, spending habits and risk tolerance.

A HELOC gives you more repayment flexibility and lets you borrow only the amount you need when you need it. That way you are only paying interest on the amount you have taken, whereas with a loan, you pay interest on the money whether you are using it or not. HELOCs are also good for short-term financing needs that arise unexpectedly, especially if you know you will have the money in hand to cover an expense a few months after incurring it.

A home equity loan is best used for a one-time goal for which payment will be due in full and which has long-lasting benefits. For instance, a loan makes sense if you want to fund a specific home improvement project that boosts the equity in your house or if you want to pay off high-interest credit card debt in one fell swoop.

Why a home loan is better

A home loan might be a better choice because clearing up credit card debt could take you a long way toward improving a bad credit situation, while saving you thousands in interest. For example, if you owe $10,000 on a credit card that charges 18% interest and you make the minimum monthly payment of 4% of the balance; it will take you over ten years to retire the debt. The interest you pay during that decade comes to $5,575.

If you pay off the credit card with a home loan, you not only save on high interest but you also pay lower interest on the new loan; and that interest is usually tax deductible, up to $100,000.

To learn more, or to get a no-risk quote on a home loan at E-Lends.com. It is a convenient place to see how much home equity you might be able to cash out, and at what rate.