Home Equity
If you have equity in your home (“equity” is the current market value of your home minus the outstanding mortgage
balance), you might be thinking of using it to your advantage by borrowing against your home’s equity for home improvements,
a vacation, education expenses, debt consolidation or other reasons. There are two main choices when it
comes to taking advantage of the equity in your home: a LOAN or LINE OF CREDIT (HELOC). Each of these has its
unique features and advantages.
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HOME EQUITY LOAN
You borrow against the ownership you have in your home (read my post on equity here). A Home Equity Loan is very
similar to other loans in that the lender gives you a lump sum, expecting repayment plus interest and other fees. Home
Equity Loans are secured by your home and are good for use on a specified project for a set amount. Many people find
that Home Equity Loans are convenient for debt consolidation, paying for education expenses not covered by federal aid
and paying for weddings, as the interest rate is often lower, and usually tax-deductible.
HOME EQUITY LINE OF CREDIT
A Home Equity Line of Credit (HELOC) is another type of home equity loan. However, a HELOC is considered a revolving
credit account. It is felxible. It works like a credit card - you can borrow money, and as you pay it down, you can borrow
more. A HELOC comes with a limit that usually corresponds somewhat to the equity you have in your home. Money from
a home equity line of credit is fairly accessible. You do not have to apply for a new loan to get more money out if you
need more than you thought you did. However, you do
have to stay within your limit. The interest rate on a
HELOC is likely to be slightly higher than a more
conventional Home Equity Loan, and variable. Like a
Home Equity Loan, the HELOC often has taxdeductible
interest payments.
A HELOC is most convenient for those working on
home improvements. Because of the nature of major
remodeling or improvement projects, things can
easily cost more or less (usually more) than you
thought. A HELOC makes it easier for you to borrow
money as you need it, without having to wait for
approval on another loan.
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Home Equity Line of Credit |
Home Equity Loan |
Description |
Revolving line of credit that you can pay down and then re-borrow. Allows you to activate your line up to the approved amount when you need it. |
Fixed amount of money repayable for a fixed period. Locks in your interest rate for up to five years. |
Repayment Term |
No principal payments required during the first 10 years. |
Maximum 15 years repayment. |
Access Options |
Access to funds through checks and online or telephone transfers to a Town & Country Bank or Logan County Bank checking account. |
n/a |
Interest Rate |
Click here for rates. |
Click here for rates. |
Payments |
As low as $50 per month. |
What will my payment be? |
Other Features |
Convert your line to a loan at anytime for a fee. |
A variety of repayment options.*
Savings on fees.** |
*You may have a balance remaining at the maturity date. The remaining balance may be paid in full, refinanced with a different loan product, or refinanced for a final term of the loan.
**Documentation fees on all consumer loans will be waived if you decide to switch your checking, savings, and/or money market account from another bank to our Bank.
Calculators ¥ :
Click here to simplify your life. Sign up to automatically deduct your Home Equity Line of Credit or Loan payment from your checking account -  (file size: 33 KB)
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