There are different ways to borrow your home’s equity. One of the more common approaches you may hear about is a Home Equity Line of Credit (HELOC). There is a second option that many borrowers can tap into when in need, which is the Home Equity Loan. They sound similar, so what is the difference you may ask? A Home Equity Loan provides you with the option to borrow against your home’s equity, much like a HELOC will, but the biggest difference is that a Home Equity loan means you have to borrow one large lump sum and pay it back over time. While a HELOC will allow you to borrow a set amount that remains on reserve. You are then able to make draws on the line up to your approved limit, while paying it back over time. Now let’s review the key features specific to First Savings Bank:
Home Equity Loan
- Home Equity loans offer fixed interest rates
- Payments will be set monthly
- Offers the ability to consolidate debt for one easy payment and potential to save on interest
- Ability to borrow up to 90% of the home’s value
Home Equity Line of Credit
- Variable Rate
- Two payments options can be offered such as interest only and 1%
- Easily access the line of credit through check or money transfer
- Lower closing costs associated with smaller amounts
- Ability to use the line as a security blanket to cover emergencies
Before deciding on whether to apply for a HELOC or Home Equity loan you should consider the amount you need and the intended purpose for the loan. Answering those two questions will help you make the decision on whether a HELOC or Home Equity loan is right for you. Visit one of our convenient locations today.
