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Business/Careers

Need a loan? What to know about a Home Equity Line of Credit

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Looking to make home improvements this spring, or working to pay off personal debts like a car loan or credit card?

By using the equity in your home, you may qualify for a sizeable line of credit at a relatively low interest rate. A home equity line of credit, or HELOC, is one option to consider if you need a way to access cash quickly.

“A HELOC can be used for many different things. Each buyers needs are very different,” said Amy Trease, residential loan officer at FNNB Bank.

“The timing piece is purely situational and very different for every borrower. Some people need it for the emergency situation that they weren’t budgeting for, and some people need them to purchase things that they have been budgeting for,” Trease added.

HELOCs are different from a Home Equity Loan. HELOC is a revolving line of credit essentially. People can borrow up on it and pay it down, and then do that all over again. The term of a HELOC can vary and so can repayment terms.

The home equity loan is more of a standard loan with a specific amortization and payment amount.

“Both are great options and both serve different needs,” said Trease. “An open discussion about what you are trying to do with the funds and hoping to accomplish with your lender is the best way to determine which is the best fit.”

When it comes to interest rates, variable or fixed, you should never assume you fully understand. It’s important to ask questions and understand all your options.

The amount you can borrow is determined by how much equity you have, or the current value of your home, minus the balance owed on your mortgage.

Determining your equity can be tough, and there are only a few ways to get a true market value for your home. The appraisal or valuation process is the best way to get a market value.

FNNB Bank : 100 N. 2nd Ave. W., Newton, IA 50208 : 641.792.3010 : www.fnnbbank.com