Using your home’s equity can be a smart way to fund upgrades or renovate spaces. After harsh seasons, the list of home improvements often grows quickly. Fortunately, there are several options for borrowing against your home’s equity. Let’s break them down and find out which one is right for you.
Home Equity Loan
A home equity loan (HELOAN) is a lump-sum term loan borrowed against the equity in your home. This loan has predictable monthly payments with a fixed interest rate. It provides a one-time, large payout, which is great for home renovations, debt consolidation, or other major purchases.
Home Equity Line of Credit
A Home Equity Line of Credit (HELOC) is a revolving line of credit. You can draw funds as needed and repay what you use. This line of credit usually has a variable interest rate. It works similarly to a credit card. It offers more flexibility and can be used for unexpected expenses, home improvements, or emergencies.
When should you have a HELOAN or HELOC:
• When you know exactly how much you need to borrow – HELOAN
• You prefer stable and predictable payments – HELOAN
• Interest rates are low and you want to take advantage – HELOAN
• You are doing a one -time project – HELOAN
• You want flexibility to borrow over time – HELOC
• You have several projects but want to spread them out – HELOC
• You only want to pay for what you need – HELOC
• When you want a sense of comfort for any unexpected expenses – HELOC
If you have built significant equity in your home, it might be time to explore your home equity options. Home projects and improvements may increase your home’s overall value. It might also be a good time to consolidate other debt. There are several ways you can utilize your equity. If you are still unsure which option is best for you, you can always stop by your local branch and speak with a member service representative, and they guide you to the best option.