Equity is the difference between how much is owed on a mortgage loan and how much the home is worth. For example, if you owe $100,000 on your mortgage loan and your home is worth $150,000, you have $50,000 of equity in your home. A home equity loan or line of credit allows you to borrow money using your home's equity as collateral.
A home equity loan or line of credit is a second mortgage that lets you turn equity into cash, allowing you to spend it in a variety of ways. You may choose to use the money for:
Home improvements or repairs
- Credit card debt and debt consolidation
- College education/tuition costs
- Medical and emergency expenses
- Much more!
Home Equity Loan
A home equity loan is a one-time lump sum that is paid off over a set amount of time, with a fixed-interest rate and the same payments each month.
Home Equity Line of Credit (aka "HELOC")
A home equity line of credit has a revolving balance, and a variable-interest rate that fluctuates over the life of the loan. A HELOC allows you to borrow up to a certain amount for the life of the loan - a time limit set by the bank. During that time, you can withdraw money as you need it. As you pay off the principal, you can use the credit again.
Both are referred to as second mortgages, because they're secured by your property, just as your primary mortgage is secured by your property.
|Home Equity Loan||Home Equity Line of Credit (HELOC)|
|Uses home as collateral||X||X|
|Adjustable interest rate||X|
|Withdraw funds as needed||X|
|Monthly payments remain the same||X|
|Monthly payments can fluctuate based on the balance owed||X|
|Funds can be used for anything||X||X|
If you have additional questions or would like to know how we can help you leverage the equity in your home, call us today at 800-209-2616 and ask to speak with a Personal Banker. Start putting your Equity to work for you!