Home Equity Loans
Let your home’s value work for you. Homeowners can use the equity in their house to finance a home equity loan to pay for debt consolidation, student loans, or home improvement projects.
There are two types of home loans you can apply for: a Home Equity Loan or a Home Equity Line of Credit (commonly called a HELOC). Both loans are secured using the value of your home. You are, in essence, converting the equity in your home to cash. Use that cash to make improvements and you could end up increasing the value of your home.
Home Equity Loan
With this type of home loan, all the funds are delivered in one, single, lump sum. The loan has a fixed repayment term with a fixed monthly repayment amount and a fixed interest rate.
Consider this type of loan if:
- You know exactly how much your home renovation is going to cost and you want to keep your monthly payments consistent.
- You know the exact amount of the expense you want to pay off.
Home Equity Line of Credit
A Home Equity Line of Credit acts much like a credit card, or a revolving line of credit. You draw the amount of money you need, pay it back, and then borrow again.
This can be a good choice if:
- You aren’t sure which do-it-yourself project you are going to tackle first or you want to start multiple projects at one time without knowing the exact cost of any of them.
- You have multiple bills/expenses to pay with differing amounts.
- A great option if you want readily available cash in case of emergencies.