As a homeowner, you can use the equity built up in your home to pay for one-time or ongoing expenses. Smart use of these assets begin with understanding how home equity works and with selecting the right home equity loan to fit your needs.
When you use your home equity for a loan or line of credit, you’ll typically pay a lower interest rate than other financing methods such as unsecured loans and credit cards. Using your home equity is a popular and viable funding alternative, especially if you want to avoid using your savings to take care of these expenses – and there are often tax advantages. Consult your tax advisor regarding your particular situation.
Your home equity ensures you have the financial resources available when you need them. Use your home equity to fund:
- Home improvement projects
- Consolidate bills
- Educational expenses
- Life events such as a wedding or new baby
- Buying a new car
- Anything you want
Home Equity Loans
With a fixed rate and term, you borrow a set amount, then make equal monthly payments over a specific time period.
Home Equity Lines of Credit (HELOC)
This is a variable rate line of credit, where you can access the funds at any time, for any purpose. Since it’s a revolving line of credit, it works just like a credit card – when your balance is repaid, your credit line is replenished. You only pay interest on the money you actually advance.
Part fixed-rate loan, part variable-rate line of credit, a split second offers the convenience and flexibility you may be looking for. If you know an amount you need up-front, you take out a fixed-rate loan for it. Then, you add on a variable-rate line of credit, allowing you to access the funds as you need them.
Equal Housing Lender.