If you’re thinking about making home improvements or buying a new vehicle, you may want to consider tapping into your home’s equity.

Your home equity – the difference between your home value and what you owe on the mortgage – can help you cover these and other expenses.

Home equity financing can be set up as a loan or a line of credit. With a home equity loan, the lender advances you the total loan amount upfront, while a home equity credit line provides a source of funds that you can draw on as needed. Either of these options can help you pay for:

  • Remodeling and home improvements
  • Car, truck, SUV or boat
  • Vacation expenses
  • Tuition
  • Wedding

Here are a couple quick facts about each to help you decide which may be right for you:

Home equity loan

  • Repay the loan with equal monthly payments over a fixed term (just like your original mortgage).
  • The amount you can borrow is usually limited to 85% of the equity in your home. The actual amount depends on your income, credit history and the market value of your home.

Home equity line of credit

  • This is a revolving line of credit, much like a credit card. You can borrow as much as you need, any time you need it, by writing a check or using a credit card connected to the account.
  • You make payments only on the amount you actually borrow, not the full amount available.
  • HELOCs may give you certain tax advantages unavailable with some kinds of loans. Talk to an accountant or tax advisor for details.

Learn more about Starion’s loan options.

Courtesy of https://www.consumer.ftc.gov/articles/0227-home-equity-loans-and-credit-lines