Home Equity Loans & Lines of Credit
Your home can help finance improvements to your living space and so much more!
What is home equity?
Home equity is the difference between the current market value of your home and the current balance on your mortgage and any other loans that are secured by your property. If your home is worth $200,000 and you still owe $120,000, you have $80,000 in equity. If you own your home outright, your equity is 100%. The amount of equity you can borrower against is determined by the LTV (loan to value) ratio requirements of the lender.
When you apply for a home equity loan or line of credit, the lender looks at the total loans secured by the property divided by the current appraised value of the home. This helps them decide how much you may be able to borrow. The more equity you have, the more you may be able to borrow. Like a mortgage, your home will be used as collateral for the new home equity loan or line of credit. A home equity loan may be tax deductible.*
|
Compare
Home Equity Term Loan vs. HELOC accounts
|
||
Loan Type |
Installment loan secured by the equity in your home. |
Revolving line of credit secured by the equity in your home. |
| Rate Structure |
Fixed interest rate. |
Variable interest rate based on the prime rate. |
| Access to Funds |
Receive the entire loan amount upfront as a one-time distribution. |
Draw funds as needed during the draw period up to the approved credit limit. |
| Terms |
A variety of loan terms are available to fit your budget. |
Includes a draw period followed by a repayment period. |
Monthly Payments |
Predictable fixed payments until the end of your loan, or until you pay the loan off. |
Only make payments on the amount you borrow. Payments may fluctuate as interest rates change and balances are drawn or repaid. |
| Best For |
One-time, large expenses such as major home renovations, debt consolidation, or a major purchase. |
Ongoing or uncertain expenses such as phased home improvements, emergency expenses, education costs, or ongoing projects |
Borrowing Flexibility |
No ability to re-borrow funds. |
Funds can be borrowed, repaid, borrowed again during the draw period, without having to re-apply. |
Interest charged on |
Full loan amount from the date of funding |
Only the amount actually drawn from the line of credit. |
Ideal Borrower |
Someone who knows exactly how much money is needed and when. |
Someone who needs flexible access to funds over time and can manage variable-rate risk. |
Loan Type
-
Installment loan secured by the equity in your home.
- Rate Structure
-
Fixed interest rate.
- Access to Funds
-
Receive the entire loan amount upfront as a one-time distribution.
- Terms
-
A variety of loan terms are available to fit your budget.
Monthly Payments
-
Predictable fixed payments until the end of your loan, or until you pay the loan off.
- Best For
-
One-time, large expenses such as major home renovations, debt consolidation, or a major purchase.
Borrowing Flexibility
-
No ability to re-borrow funds.
Interest charged on
-
Full loan amount from the date of funding
Ideal Borrower
-
Someone who knows exactly how much money is needed and when.
Loan Type
-
Revolving line of credit secured by the equity in your home.
- Rate Structure
-
Variable interest rate based on the prime rate.
- Access to Funds
-
Draw funds as needed during the draw period up to the approved credit limit.
- Terms
-
Includes a draw period followed by a repayment period.
Monthly Payments
-
Only make payments on the amount you borrow. Payments may fluctuate as interest rates change and balances are drawn or repaid.
- Best For
-
Ongoing or uncertain expenses such as phased home improvements, emergency expenses, education costs, or ongoing projects
Borrowing Flexibility
-
Funds can be borrowed, repaid, borrowed again during the draw period, without having to re-apply.
Interest charged on
-
Only the amount actually drawn from the line of credit.
Ideal Borrower
-
Someone who needs flexible access to funds over time and can manage variable-rate risk.
Want to talk with a loan expert?
Connect with a member of our lending team online or by calling 1-800-344-5626 Monday – Friday from 8:00 AM – 6:00 PM.
Ready to apply for a loan?
Already know what loan you want? Apply online today.
Just researching?
Check out our rates
Home equity loan
If you have a one-time borrowing need such as home improvement that requires a substantial lump sum payment upfront or for debt consolidation, a home equity loan is the way to go. You'll have a fixed rate and a payment for the term of your loan giving you protection from rate fluctuations.
Home equity line of credit
If you need to make quarterly school payments or you have home improvements that may take several months and payments to complete, a home equity line of credit (HELOC) is a good option. It's an open-ended loan that gives you the flexibility to borrow again and again without having to reapply. Plus, you only make payments on the amount you use from the line of credit. It's also a beneficial option if you want to have funds available in case of emergencies, such as needing to repair your roof, replace a water heater or pay other unexpected bills.
Contact our loan experts
Disclosures
*Consult your tax advisor regarding the deductibility of interest.