Borrowing Against With Your Home Equity
What is a Home Equity Loan?
A Home Equity Loan allows you to borrow a lump sum of money based on the equity you’ve built in your home. This type of loan is ideal for homeowners looking to make significant purchases or investments with predictable monthly payments.
Key Features:
Fixed Loan Amount: Receive a one-time lump sum based on your home’s equity, providing you with immediate funds for major expenses or projects.
Fixed Interest Rate: Enjoy a fixed interest rate for the term of the loan, ensuring predictable monthly payments and budgeting ease.
Longer Repayment Terms: Choose from various repayment terms, typically ranging from 5 to 15 years, to match your financial goals.
Potential Tax Benefits: Interest paid on a Home Equity Loan may be tax-deductible, depending on your situation and current tax laws.
What is a HELOC?
A Home Equity Line of Credit (HELOC) provides a revolving line of credit based on the equity in your home. It offers flexibility for ongoing expenses or projects, allowing you to borrow as needed up to your credit limit.
Key Features:
Revolving Credit: Access a line of credit that you can borrow against as needed, similar to a credit card, up to your credit limit.
Variable Interest Rates: HELOCs typically have variable interest rates, which may change based on market conditions, potentially affecting your monthly payments.
Draw and Repayment Periods: HELOCs usually feature a draw period (typically 5 to 10 years) where you can borrow funds, followed by a repayment period (typically 10 to 20 years) where you repay the principal and interest.
Flexible Borrowing: Use funds as needed for various expenses, such as home improvements, education costs, or debt consolidation.
Home Equity Loan and HELOC Terms:
Loan Amount: Based on the equity in your home, with limits varying by lender and property value.
Loan Term (Home Equity Loan): Typically 5 to 15 years.
Draw and Repayment Periods (HELOC): Draw period of 5 to 10 years, followed by a repayment period of 10 to 20 years.
Interest Rate: Fixed rates for Home Equity Loans and variable rates for HELOCs.
Eligibility Requirements: Proof of income, credit history, and home equity.
Additional Costs: Appraisal fees, closing costs, and other associated expenses.
Borrow against your home equity. Choose a lump sum or credit limit, but consider the terms before committing.”
