What is better, home equity loan or line of credit on home I own outright?

I just finished building my house and I have no mortgage or anything as I had enough cash to buy the land and build outright. But, I have no money left to landscape and have some medical bills I would like to pay off. Can I get a home equity loan or line of credit on my house? Which is better?

A mortgage would be your best bet when it comes to a lower interest rate.

Most banks have prepenalty payments on most of the equity type of loans. However the line of credits generally will not.

Take money out to finish the landscaping but don't pay your medical bills with it....and I'll tell you why.

Medical bills can NEVER be placed as a lien against your home, and as long as you are sending them money on a regular basis, they can't turn them over to collections. Just call each one, set up a payment plan and stick to it.

If you use a HELOC to pay off medical bills, do you know what you have done? You just took unsecured debt and turned it into SECURED debt, and in the event that you can't pay them off, obviously you can lose your house.

Medical collections just usually have a single fee associated with them and generally do not generate interest...if you use a HELOC to pay them off, then you have just added interest to the debt.

I don't agree with Mary's answer, if you have medical bills outstanding, those will appear on your credit report and if you are having trouble paying them, the creditor will eventually do a charge-off, which will also appear on your credit report.

With a HELOC, you will pay interest on the entire amount. On a line of credit, you will only pay interest on what is being borrowed at the time. Both could have fine print fees you will need to check out before signing on the dotted line.

Some lines of credit will charge you a transaction fee each time you access it, typically around 3% of the transaction.