Your home’s equity is a useful benefit to take advantage of if you’re in need of a large amount of money for a project, purchase, or consolidating your finances. A home equity loan or line of credit, allows you to borrow up to 80 percent of your home’s equity, and repay the loan with low-interest payments.
Before you get started, below are three important tips to help you take advantage of your home’s equity.
1. Know what you're working with.
Before you decide to do anything with your home equity, you’ll need to first find out exactly how much equity you have available. To do this you’ll need to calculate the difference between the market value of your home and how much you still owe on your mortgage. For example, if your home is worth $250,000 and your remaining mortgage balance is $200,000, you have $50,000 in home equity.
2. Know your borrowing basics.
There are two basic ways you can borrow against your home equity:
- Home Equity Loan – This is a lump sum of money you receive at one time, which will be paid back over a fixed period of time by way of making monthly payments. Home equity loans typically have a fixed interest rate.
- Home Equity Line of Credit (HELOC) – This type of loan gives you the option to borrow money as needed instead of receiving it all at once. Your lender will establish the total amount of money you’ll have available to borrow based on your home’s equity.
3. Using your funds
Whether you want to remodel your kitchen to add value to your home, take the family on a dream vacation, pay off medical bills, or buy a new toy, you can make it happen with your home equity. Simply, repay the loan’s low-interest payments and enjoy!
A home equity loan or line of credit is a powerful tool to help you when you need it. If you would like more information, contactthe professionals at General Electric Credit Union today. At GECU, you’ll receive great rates, and comprehensive financial advice from professionals who have your best interest in mind.
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