Depending on what you need the funds for or the amount you need, a Line of Credit using your home’s equity might be right for you. A home equity line of credit can provide you with a larger credit line for any lending need at a lower* fixed rate. Continue reading
This January we’re asking our members to challenge our loan rates and let’s try and save you hundreds by helping you unlock the hidden potential in your home. A Home Equity loan might provide you funding for something important, or maybe we can help save you on a Mortgage loan? No tricks and no gimmicks. We’re just looking to help our members who might want a lower monthly payment or some extra cash. Our goal is to save our members’ as much money as possible on their loans, let’s see what we can do for you.
A Home Equity Loan at HCFCU…Makes the Most “Cents”!
Your home has hidden potential. Get up to 80% of your home’s value in available equity to do those much-needed renovations, repairs, or buy new appliances. Now is a great time to take advantage of the extra savings you can get with a Home Equity loan. Credit unions are known for giving you rates and terms in your best interest. Download the Home Equity packet to apply. We’ll work with you to figure out the type of loan that works best for your situation. With your home and the credit union…YOU ARE COVERED!
Here’s why HCFCU & Home Equity is the way:
- You can use the funds to increase the value of your home.
- You can use the funds to increase your family’s comfort or save on energy costs.
- You can use the funds for what you need most!
- All Home Equity loans closed before February 28th are entered for a chance to win $250!1
Ask about our great rates and flexible terms! For our latest rates visit hcfcu.com/rates.
1 Odds of winning depend on the total number of Home Equity loans closed during the promotional period of January 1st through February 28th. Two winners will be selected on or before March 6th and notified via email or phone number on file, then awarded through a direct deposit into the credit union account. All members are eligible for drawing if their loan closes prior to the promotional period end date and register on a new home equity loan or home equity line of credit reporting. Additional Disclosures: All members must be in good standing at the time of drawing in order to qualify for the prize and over the age of 18. CU Members Mortgage has a contractual relationship with Harris County Federal Credit Union to perform mortgage origination services. Visit hcfcu.com/mortgages and click the link on site to request a copy of the HMDA disclosure statement and report. HCFCU is an Equal Housing and Equal Opportunity Lender. Your savings are federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. Rates are subject to change without notice. For the latest rates please visit hcfcu.com/rates or contact a credit union representative. Your actual Annual Percentage Rate (APR) will be based upon your individual creditworthiness, loan amount, the term of the loan and applicable prepaid items.
When to Use a Home Equity Loan or a Line of Credit
Whether it’s paying for your child’s college education or remodeling the kitchen, you might be thinking about borrowing against your home’s equity as a way to finance it.
Equity is the difference between your home’s market value and the amount you owe on a mortgage, if you have one. One of the advantages of using equity is the tax benefit it can provide, which can lower the effective interest rate you pay.
Home equity financing can be set up either as a loan or as a line of credit. Each has particular distinctions. With a loan, you get all the money up front and make set monthly payments, like a mortgage, for a predetermined time. Lines of credit give you a source of funds to draw from as needed, like a revolving charge account. You only pay back what you spend, plus interest.
Home Equity Loans
These are often referred to as second mortgages, assuming you already have a home loan. But where the first loan finances the purchase of your home, the second is a lump of cash the bank gives you to spend as you please.
Harris County Federal Credit Union limits the amount you can borrow to no more than 80 percent of your home’s value, including the first mortgage. The amount also depends on your income and credit history. These loans typically have a fixed interest rate and a fixed term, or the amount of time you have to pay it off.
You may need to pay for closing costs, though they’re much less than a full mortgage. Also, you’ll probably have to have your property appraised, and there may be fees associated with that as well.
Once approved, you’ll get a check for the entire loan amount.
Lines of Credit
A home equity line of credit, or HELOC, can provide more flexibility than a loan, since you draw from it as needed.
Like a mortgage, a HELOC uses your property as collateral. But the interest you pay typically varies depending on some key market benchmark, meaning your monthly payment can go up or down over the repayment period. Many HELOCs only let you withdraw money for a certain amount of time, and some require withdrawals to be at least a minimum size.
Once that time is up, you may be able to renew the line of credit. If not, some lenders require you to pay the outstanding balance immediately, while others may let you repay the balance over a fixed time. With some, you can begin paying off what you borrow as soon as you’ve used some of the money available.
Typically there are no closing costs, although there can be other fees and costs, like an appraisal. Some lenders may charge an additional fee that could result in a large balloon payment at the end of the credit line’s term.
Be sure to ask whether there are minimum or maximum withdrawal requirements and how you can make use of the money – with checks, a credit card or both. Some plans also require you to take an initial advance when the account is set up.
The bottom line
Whether you choose a home equity loan or a line of credit, remember that federal law gives you three days to reconsider and cancel any signed credit agreement without penalty. If you do decide to cancel, you must do so in writing.
It’s also important to remember this: You’re using your house as collateral. So if you can’t or don’t make payments, your lender could foreclose on your home.
Using your home’s equity can be a valuable form of financing, and one that can lower your overall costs. Just make sure you’re aware of the risks and that you can pay what you owe.
Sarah Cooke, NerdWallet