A home equity line of credit or HELOC can be used for a multitude of purposes such as home improvement, reduce credit card debts, and more. When homeowners need quick cash, a good number choose a mortgage refi and create a new home loan. Yet, there is a better way to pull money from your home's equity, and it doesn't involve applying for a new mortgage or paying expensive closing costs.

Here are three things you should know before applying for a home equity line of credit.

1. Lower Fees and Paperwork.

On average, a home equity loan requires less documentation than a traditional loan or mortgage refi. The lender does not charge points or origination fees, which means borrowers pay less at closing. In many instances, the lender will deduct the HELOC fees from the available line, wherein the borrower doesn't have to pay an out-of-pocket expense.

2. Adjustable Rate Home Equity Lines of Credit

The majority of home equity lines have adjustable interest rates, and the rate can fluctuate at any given time. Unlike traditional adjustable rate mortgages that include an initial fixed rate for a specific number of years, rate changes on a HELOC may occur on a daily or monthly basis, which means your minimum monthly payment can significantly increase within one month. Some home equity lines of credit can be switched to a fixed rate loan.

3. HELOC"s offer Flexibility and Convenience

Home equity lines of credit are ideal for homeowners who will need extra cash over an extended period. Every HELOC has a draw period (usually ten years), which lets borrowers access the line and withdraw cash as needed. Lines of credit provide the flexibility to withdraw as little, or as much cash needed. Plus, home equity lines of credit are convenient because you don't have to keep applying for a new loan.