What is a home equity loan?
Generally speaking, there are two types of home equity loans; a home equity loan and a home equity line of credit (HELOC). Either one can be a great way to consolidate debt or pay for major expenses.
Both are determined by the value of your property and how much you already owe on that property. Where they differ is how they are repaid and how their rates are set.
- A home equity loan offers a fixed rate and a set repayment schedule.
- A home equity line of credit (HELOC) provides more flexibility as you are able to draw on your line of credit, pay it back, and draw on it again; very much like a credit card. The rate with a HELOC is variable and floats with the Prime Rate.
Either one of these can be a great option to finance major expenses that may occur.
How can you use your home equity loan?
There are a number of things with which a home equity loan or HELOC can help. Contact one of our lenders (below) today and learn about your options!
- Home improvements
- Debt consolidation
- Vehicle purchase
- College education
- Medical bills
Advantages Over Other Forms of Credit
- Lower rate. Typically the rate for a home equity loan or a HELOC is quite a bit lower than a credit card or other lines of credit. This is because it uses your home for collateral whereas a credit card is unsecured.
- Tax deductible. Check with your accountant, but you may be in a position to deduct the interest on your taxes.