You don’t have to own your home outright to use its equity. If you’re paying off your mortgage, you can take advantage of the equity you’ve already built.
From renovations to college tuition and more, you can use your equity to finance several different types of investments at a much lower interest rate than the terms of most personal loans.
What Is a Home Equity Loan?
Home equity installment loans (HEIL) and home equity lines of credit (HELOC) are based on the amount of equity you’ve accumulated.
The equity of your home is the difference between the principal and the amount you owe. In other words, it’s how much of your home you own. The bigger your downpayment or the longer you’ve been paying your mortgage, the more equity you should have.
A HEIL is based on equity. The more equity you have, the bigger the loan you can take out. While home equity lines of credit are also based on how much equity you have, they are – as the name suggests – lines of credit that can be borrowed from as needed.
Why Use Your Home’s Equity?
Loans and lines of credit borrowed against the equity of your home are separate from your mortgage, so they require additional payments.
However, home equity loans often have far lower interest rates than other forms of financing because home equity loans use the equity of your home as collateral.
At Guthrie Community Credit Union, we offer home equity loan rates as low as 5.70% APR* with no closing costs.* Compare that to the cost of taking out personal loans or using a credit card, both of which can exceed 10% APR.
How Can You Use Your Home’s Equity?
- Home Renovations
HEILs are typically used for home improvements that will add value. It makes sense to use your home’s existing equity to boost the value of that investment. On top of that, the interest paid on HEILs may be tax deductible if done to improve your home.
- Pay For College
Home equity loans can be used to finance anything, but college tuition is a common expense to finance with home equity.
- Debt Consolidation
Taking out a home equity loan can potentially consolidate all of your existing debt into one, simple loan with a lower interest rate. Consolidating debt is a popular reason to get a home equity loan because it makes payments easier and can help you get out of debt faster.
Home Equity Loans at GCCU
GCCU is here to help our members reach their goals at every stage of life with exclusive member rates, credit lines, and more. Learn more about home equity installment loans and home equity credit lines at GCCU online. You can also apply online or call your closest GCCU branch with any questions.
*APR= Annual Percentage Rate. Rates are for qualified borrowers and are based on the credit worthiness of the individual. Actual rates may be different than the rates shown. Closing costs are waived unless the loan is discharged within 3 years of the origination date in which case you will be required to pay closing costs, which consist of the following: title search, flood determination, recording fees and appraisal. Subject to membership, credit and property approval. New York State mortgage taxes do apply. Some restrictions apply.