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Home Equity Loan

Your home is more than just a place to live, it’s a valuable financial asset. Turn your home’s equity into a financial tool for renovations, debt consolidation, or major expenses. With fixed rates and predictable payments, a home equity loan offers stability and flexibility to help you achieve your goals.

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What is a Home Equity Loan?

A home equity loan lets you borrow a lump sum of money using the equity in your home as collateral. This type of loan typically comes with a fixed interest rate and regular monthly payments. It’s an excellent option for homeowners looking to fund major expenses, such as home renovations, debt consolidation, or educational costs, without affecting their primary mortgage rate.

Home Equity Loan Requirements

Established Equity: At least 15%-20% equity in your home
Debt-to-Income Ratio (DTI): Less than 43% of your total monthly income
Credit Score: 620 or higher, a higher score increases your approval chances
Reliable Income: Proof of steady income through pay stubs, tax returns, or other financial documents

Advantages and Disadvantages of Home Equity Loans

Advantages

  • Fixed interest rates provide predictable monthly payments
  •  Access to larger funds compared to personal loans or credit cards
  • Potential tax benefits when used for home improvements (consult a tax professional)

Disadvantages

  • Your home serves as collateral, increasing risk if payments are missed.
  • Closing costs and fees can range from 2%-5% of the loan amount
  • Loan amount is fixed, and additional borrowing requires a new loan

HELOC vs. Home Equity Loan

Home Equity Loan

Provides a lump sum with fixed rates and consistent payments. Ideal for one-time expenses.

HELOC

Functions like a credit card with a revolving credit line, variable interest rates, and payment flexibility. Best for ongoing or unpredictable expenses

Home Equity LoanHELOC
Loan DisbursementLump sum at closingCredit line to draw from as needed
Interest RateFixedVariable (may convert to fixed later)
Repayment PeriodTypically 5-15 yearsDraw period (10 years) + repayment (20 years)
Best ForDefined expenses like renovationsFlexible or recurring financial needs
Home Equity Loan
Loan Disbursement
Lump sum at closing
Interest Rate
Fixed
Repayment Period
Typically 5-15 years
Best For
Defined expenses like renovations
HELOC
Loan Disbursement
Credit line to draw from as needed
Interest Rate
Variable (may convert to fixed later)
Repayment Period
Draw period (10 years) + repayment (20 years)
Best For
Flexible or recurring financial needs

Additional Resources

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Ready to Put Your Home’s Equity to Work?

Take advantage of your home’s equity with a loan that offers fixed rates and predictable payments. Our loan officers are here to guide you through the process.

Get Started Today!