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Have you been putting off home improvement projects or other large purchases? If you’re waiting for the right circumstances to use your home equity loan or line of credit, now is a great time to move forward.
A home equity loan or line of credit taps into the buying power of your home. You can use it to pay for home improvements, college tuition, debt consolidation, and medical expenses. Your home equity provides a low-cost option for borrowing money at interest rates that are tough to beat.
A home equity line of credit (HELOC) and a home equity loan are similar, but not the same. Understanding the differences can help you borrow wisely.
A home equity loan works well if you have a specific amount and/or project in mind. With a loan, you get the money you need upfront and then pay it back at a fixed rate and fixed monthly payment over a fixed term. The monthly payment and interest remain the same for the life of the loan.
A home equity line of credit is a form of revolving credit. With a HELOC, you have a credit limit that you can borrow against during the draw period. After the draw period ends, there’s a repayment period when you repay the outstanding balance of the loan. A HELOC has a variable interest rate that fluctuates over the life of the loan.
HELOCs can be used to your advantage in a number of ways:
Find out what you can accomplish when you tap into the power of your home equity. Whether you plan to pay for projects now or finance other large expenses down the road, we’re here to help make it happen. Learn more about using your DCU home equity loan or HELOC to reach your goals.
This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.
Rates are effective November 12, 2021.
*APY=Annual Percentage Yield. Requires a $5.00 minimum balance to open the account and remain on deposit to maintain membership status. Rates are variable and may change after the account is opened and are subject to change weekly. Fees may reduce earnings on the account. One Primary Savings account per person, additional memberships receive one savings account. Other conditions may apply. Please refer to DCU's Account Agreement for Consumers, and Schedule of Fees and Service Charges, for important information and disclosures.
You might be familiar with the basics of how credit scores work. For example, the more you borrow against your credit limit, the more your credit score can drop. If you have a home equity line of credit (HELOC), that fact might make you wary of using too much of it. And you’d be wise to be cautious about how you spend money. But you can actually maintain or even increase your credit score while using a HELOC. Here’s what you need to know about HELOCs and credit.
A home equity line of credit (HELOC) is a convenient and powerful tool that allows you to tap your home’s equity. If you are looking to finance a home renovation or consolidate high-interest debt, a HELOC could be just what you need. However, because of its versatility, you may be tempted to utilize your HELOC for things you probably shouldn’t. Let’s look at some common examples of when not to use a HELOC.