Are you considering taking equity out of your home? If you want to consolidate high-interest debt, finance home improvements, or pay off student loans, home equity loans and HELOCs (home equity lines of credit) are great options.
What are home equity loans and HELOCs?
Home equity loans and HELOCs are loans secured by taking out a loan from the equity you have in your home. Equity is the difference between what is owed on a mortgage and the home’s current value. The interest rates are generally more favorable because the home is used as collateral.
What can a home equity loan or HELOC be used for?
One of the main benefits of a home equity product is its flexibility. Home equity products are great low-interest solutions for a variety of scenarios. Home equity loans are outstanding for lowering for consolidating high-interest debt like student loans or medical bills.
HELOCs are great solutions for unexpected emergencies or making updates to your home.
What is the difference between a HELOC and a home equity loan?
A home equity loan is a standard loan with a fixed interest rate and fixed payments over the life of a loan, similar to other fixed-rate loans (i.e. mortgages). HELOCs are credit lines with variable interest rates.
Home Equity Loans:
- Receive lump sum.
- Fixed interest rate.
- Fixed payment.
HELOCs:
- Use as you need.
- Variable interest rate.
When should I consider a different loan product?
While the flexibility of home equity loans can be a great benefit, it may not always be the best solution. For example, if you are looking to purchase a vehicle, you should consider an auto loan. Specific loan products are optimized to provide the best loan rates and can typically be bundled with other services (i.e. warranty protection for auto loans).
Does a home equity loan or HELOC sound like the solution you are looking for? Contact one of CFCCU’s expert loan officers to learn more.
