For large or small purchases, a home’s equity can offer many benefits
Using your home equity is a great way to finance home improvements, cover unexpected expenses or even to cover medical expenses. The interest rates are usually way lower than carrying interest on a credit card and they can even help build up your credit score. Here’s three ways to use your equity.
Mortgage Refinance. A great option if you currently have a high interest rate on your mortgage. You can refinance to a lower rate and pull money out at the same time. If you already have a great interest rate or you recently purchased your home, you don’t want to refinance yet.
Home Equity Loan. These are commonly referred to as 2nd mortgages, or 1st mortgages if your house is paid off. They offer fixed rate loans that use your house as collateral. Home Equity Loans are great if you are working on a big remodel all at once, going on vacation, paying tuition, etc. You take out one lump sum and pay a set amount every month.
Home Equity Lines of Credit (H.E.L.O.C.). If you are working on lots of little projects over a longer period of time, this is a great option. It is a revolving line of credit that lasts for up to 10 years. You only pay for the money you take out, so it’s great for projects where you are unsure of the cost. However, these loans have a variable interest rate which can fluctuate over time. Good to have in your back pocket for emergencies or for ongoing projects, but if you need money to repair the roof, your best bet is a Home Equity Loan.
At Madison Credit Union we offer the funds as a cash payment unlike some other financial institutions. So, now all that’s needed is to decide what you want to do with all that money.