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Rates

You’ve worked hard for your home, now let it work for you. Tap into your home equity. Fund your personal needs.

Key Features

  • Competitive Rates
  • Quick Decisions
  • Local Processing

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A home equity loan is a type of second mortgage. Your first mortgage is the one you used to purchase your home, but you can place additional loans against the property as well if you've built up enough equity.

Home equity loans offer access to large amounts of money and are easier to qualify for than other types of loans.

You've heard these terms tossed around and used interchangeably, but they're not the same. 

You can get a lump sum of cash up front when you take out a home equity loan, and repay it over time with fixed monthly payments. Your interest rate is set when you borrow and will remain fixed for the life of the loan.

When there’s a maximum dollar amount available that you can borrow from whenever you like - a line of credit - this is a home equity line of credit (HELOC). You can take as much or as little as you need. This option effectively allows you to borrow in a way that’s similar to a credit card. 

A HELOC is a more flexible option because you always have control over your loan amount—and, by extension, your interest costs. You'll only pay interest on the amount you actually use from your sum of available money. 

 

Which is Right for You?

Home Equity Loan

Home Equity Line of Credit

Adjustable Interest Rate

No

Yes

Fixed Interest Rate

Yes

Yes (sometimes)

Large Upfront Sum

Yes

No

Use Money as Needed

No

Yes

Interest Only on Used Funds

No

Yes

Interest Only Payment Option

No

Yes

  •       Competitive rates and terms for major life events:
    • Education expenses
    • Weddings
    • Home remodel projects
    • Debt consolidation
    • And much more
  •       The existing equity in your home is used as collateral
  •       Available for primary residences only
  •       Convenient terms tailored to fit your budget
  •       Quick, local decision-making and processing
  •       Attentive, friendly service from start to finish

There are pros and cons of taking out a home equity loan. Perhaps the greatest advantage is a fixed interest rate. Additionally, monthly payments and terms never change.

  •       Revolving loan for ongoing or seasonal needs:
    • Education expenses
    • Home improvements
    •  Debt consolidation
    •  Emergency reserve
    • And much more
  •       The existing equity in your home is used as collateral
  •       Available for primary residences only
  •       Convenient terms tailored to fit your budget
  •       Funds available anytime without reapplying; apply once, then use repeatedly thereafter
  •       Revolving credit – as principal is repaid, more becomes available for use
  •       Easy access to funds via check or online banking
  •       Quick, local decision-making and processing
  •       Attentive, friendly service from start to finish

It’s important to weigh the pros and cons of home equity lines of credit. One of the primary advantages is you pay interest only on the amount you use, not the total amount. You also get increased flexibility with interest-only payments during the draw period.

On the other hand, higher interest rates may increase your overall payment. In addition, it’s easy to overspend with a HELOC. If you don’t use it wisely, you may find yourself left with a large balance. 

Your home equity can also be used for debt consolidation. 

Using your home equity to consolidate debt can offer several advantages.

1. One Payment 

If you’re trying to manage car loans, a personal loan, medical bills, and credit cards, you understand how challenging it can be to keep track of payment dates. 

By consolidating your debt, you can combine all bills into one single payment plan every month, simplifying your due dates and reducing the chance of missed payments.

2. FKnow when your balances will be paid in full

If you don’t keep using your cards, using a home equity loan or HELOC to consolidate debt simplifies the process of paying off credit accounts. With a home equity loan, you’ll have fixed repayment terms and know the exact date when the loan will be repaid.

3. Lower Overall Interest Rates

Due to the fact that the debt is secured against your property, home equity loans and HELOCs have lower interest rates than most major credit cards. 

The average variable credit card interest rate is anywhere between 15-20 percent. 

Meanwhile, the average rate of a HELOC  is anywhere between 4-10 percent. A home equity loan offers even lower rates and enables you to lock in a fixed interest rate, unlike a credit card that can increase at any point in time. 

Lastly, with a home equity loan, the majority of your monthly payment goes toward the principal, not just the interest.

4. Save Money

The ability to lock in a lower fixed rate not only saves money in the long term but also enables a lower monthly payment and can help you pay down the debt faster. 

For example, if you had $10,000 in credit card debt at a 16 percent interest rate, you’d pay $243 per month and more than $4,591 in interest by the time you pay it off. 

Consolidating that debt with a five-year home equity loan would not only allow you to pay off the debt faster but also reduce your monthly payments to $193 and save $3,391 in interest.

Whether you take out a lump sum up front for a large purchase, or make multiple purchases  over time with a line of credit, home equity loans and HELOCs can be utilized to streamline your personal finances.  

If you have multiple credit accounts and are looking for a manageable approach to group them together for an easy one payment per month, consolidation may be the best solution for you. 

Let the team at Advantage Financial Federal Credit Union walk you through all the details. With a relaxed approach and excellent educational guidance, you will learn how to use home equity loans and/or home equity lines of credit to achieve your financial goals.

1Consult a tax advisor.

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