How Can I Leverage the Equity in My Home?
As a homeowner, you may be able to tap into your home’s equity, which is the difference between its current value and what you still owe on your mortgage. Home equity can be a useful tool for financing renovations, paying for education, consolidating debt or covering other significant expenses. Understanding the differences between a home equity loan and a home equity line of credit (HELOC) can help you choose the option that’s right for your budget and goals.
A fixed home equity loan gives you one lump sum upfront. The interest rate is fixed, so your monthly payment stays the same during the life of the loan. This can be a good choice when you know exactly how much you need, such as for a planned kitchen remodel, debt consolidation or a specific repair.
A HELOC works more like a credit card secured by your home. You are approved for a credit limit and can borrow what you need, when you need it, during the draw period. HELOCs often have variable rates, so your payment can change if rates rise or fall. This option can be helpful for ongoing projects or expenses that happen over time.
With either option, look closely at the total cost. Ask about application fees, appraisal fees, closing costs, annual fees, early termination fees and any rate changes. Also, remember that your home is used as collateral, so borrowing should be done carefully.
Used wisely, home equity can be a helpful financial tool. Regardless of what option you choose, State Department Federal Credit Union (SDFCU) is here to help you move forward with confidence.
State Department Federal Credit Union is federally insured by NCUA and is an Equal Opportunity Lender. NMLS ID: 460361
Tricia leads SDFCU’s Consumer Lending team, bringing over 20 years of credit union expertise. She oversees auto, personal, credit card and home equity lending, using her broad background to strengthen products and deliver a better borrowing experience for members.
“My experience is great with SDFCU. The staff greets you with kindness. They are professional and always ask if there is anything else they can help you with. I have been a member over thirty years and will continue to refer family and friends!” —SDFCU Member