Utilizing Your Home’s Equity

Buying a home is one of the biggest purchases that you will make in your lifetime. It’s a place to build memories, throw parties, and spend time with those who matter most. But did you know that your home is more than just a place to host Taco Tuesday? Your home is also an investment! As a seller, you hope for a return on value, but right now it’s also an investment that can bring benefit in equity.
 

What is Home Equity?


Once you purchase a home, you automatically start building equity. Home equity is the current market value of a property, minus any liens that are attached to it. Your home equity slowly increases every time you make a payment on your mortgage. With enough equity in place, homeowners can become eligible to borrow against that equity for cash.    
 

What is a Home Equity Line of Credit (HELOC)?


A HELOC allows you to borrow money against the equity of your home up to a percentage of the total value. The funds are available as an open line of credit.  You can advance the full amount, or borrow over time and repay the balance according to the term of the agreement, giving you access to cash when you need it most. As long as the loan is paid back according to the terms of the agreements, you can continue to borrow and pay back as many times as you need, until the line of credit matures.
 

What is a Home Equity Loan?


A Home Equity Loan is a loan based off of the equity an owner has in a property. After assessing the value of the loan, home owners have the option to borrow up to a percentage of the total value (this will vary depending on the lender), minus any 1st lien mortgage.
 
The biggest difference between a HELOC and a Home Equity Loan is that the loan must be paid back in fixed installment payments. With a loan, you lock in an interest rate, and pay the same installment until the loan is repaid entirely.  
 

How Can I Use my HELOC and Home Equity Loan?


Once you open a HELOC or have a Home Equity Loan, there are many ways you can utilize it. Some people choose to put the money back into their home and work on home improvement projects, but there are other ways to make use of your HELOC or Home Equity Loan that may surprise you.
 
  • Furnish Your Home - Are you looking to spruce up your living space? Using the equity in your home to purchase updated furniture could be the perfect way to freshen up your space and make those upgrades you’ve always wanted.
 
  • Big Ticket Purchases – Many people who have big purchases on the horizon will use their HELOC or Home Equity Loan to fund them. Some examples would be a pool for your home, an upcoming wedding, or continuing your education.
 
  • Go on Vacation – During the height of COVID, most Americans put their vacations on hold for the better part of two years. Now is the perfect time to pack your bags and set off on an adventure! Using your HELOC or Home Equity Loan to fund your dream vacation will allow you to have fun while not breaking your bank account.
 

Blackhawk Bank is Here for You


While HELOCs and Home Equity Loans come with many benefits, it’s only natural that you should have questions before you make a move that involves your home. Our team at Blackhawk Bank is ready to answer your questions and help you find a solution that best fits your needs. Are you ready to learn more about how you can utilize the equity in your home? Contact us today!

Author: 
Mathew Reynolds
NMLS#476505
Senior Vice President of Consumer Banking & Investment Group