Putting Your Equity to Work

Are you trying to make a big life change, but need a little help getting the finances together to fund it? With all of the options available to you, it can be overwhelming to find the right loan or credit option for your situation. An often overlooked, but viable, option is the home equity loan. Learn more about how a home equity loan can help you reach your goals, pay down your debt or make upgrades and renovations to your home!

How does a Home Equity Loan (HeLOAN) work?

A HeLOAN allows you to borrow against the value you’ve built up in your home. They’re typically easier to qualify for than some other financing options because they are secured by your house itself.

If you’ve been diligent in paying your mortgage for many years, there’s a good chance that your home is actually worth more than you owe on it. If this is the case, a home equity loan can provide you the funds for almost anything you have in mine, not just home-related expenses.

Benefits of Home Equity Loans

HeLOANs come with other benefits than just quick access to funds.
  • Low Rates: A home equity loan typically has a lower interest rate than a credit card APR or an unsecured loan.
  • Potential Tax Deduction: Home equity loan interest payments MAY be tax deductible, which probably isn’t the case with credit card debt. You should consult your tax advisor to determine if you qualify for the deduction.
  • Lump Sum of Cash: A home equity loan provides you one lump sum of money. This allows you to knock out to expenses or costs with one check or payment.
Common Ways to Use a HeLOAN

Debt Consolidation. If you’re paying high interest rates on multiple credit cards, a home equity loan may allow you to consolidate your debt. Your interest rate on a HeLOAN will more than likely be lower than the interest rate on your credit cards. Furthermore, your interest rate will be fixed on your home equity loan, unlike a variable with a credit card which can be raised. By having your debt consolidated into one easy monthly payment through a HeLOAN, you are better able to set your budget and keep your finances heading the direction you want them to
Pay for Major Expenses or Life Events. Sometimes you just can’t anticipate the curves life will throw at you. For example, a home equity loan may be a smart way to pay off unexpected medical bills or other life events. On the other hand, the equity in your home may allow you to give your daughter an amazing wedding without racking up credit card debt at variable interest rates.

Renovate or Upgrade Your Current Home. By renovating your home with the equity you’ve already built into it, you are essentially reinvesting in your property value. Whether you’re planning a large scale addition or simply renovating your outdated kitchen and bathroom, you can use your equity to make it happen! Be sure to consider property values in your area and your plans for housing in the future. You don’t want to invest so much that you price yourself out of your local market. A good loan officer can walk you through making this decision.

When is a HeLOAN Not the Right Option?

While a home equity loan is smart financial solution in many situations, that doesn’t mean it isn’t the catch-all solution. There are times when it is smarter to consider other options available to you. That is why it’s essential to have a good relationship with a banker you can trust.

To learn more about how you can access the equity in your home to provide you with needed cash, speak to a banker today.


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