Home Loans

Some of the most common reasons for home equity loans and lines of credit are:

• Debt Consolidation
• Renovation Expenses
• Educational Expenses
• Car Purchase
• Second Home Purchase

If you are considering a home equity loan or line of credit the best place to start is your local credit union. You will want to carefully review the products, services, terms and rates available in relation to your needs.

For example:

How do you plan to use the money?
Is it a one-time or ongoing expense? Is it a necessary expense? If you are planning for a one time expense do you have a firm grasp on the budget? Is your source of income secure? If you are planning to consolidate debt are you prepared to change your spending habits? Will this home equity loan deplete all available resources? If so, how will you handle a medical or other emergency? Will you be able to get better rates by waiting until you address any credit issues? How will payments fit into your current budget?

Answering these questions and others that your loan representative might suggest can help you determine if a home equity loan or home equity line of credit is best for you.

Generally, home equity lines of credit offer more flexibility. You might pay more; however, if your home equity line of credit carries a variable rate of interest. Home equity lines of credit can also be tricky for those who struggle with money management. It can be tempting to spend the money unwisely or fall into payment patterns that do not reduce the principal.

Home equity loans are a one shot deal. The homeowner receives the loan amount in one payment. Interest and payment amounts are fixed for the life of the loan. There are good reasons to opt for both. These reasons extend beyond the immediate to include:

Lifetime costs of the loan
Current and future needs
Financial management style

Talk with your credit union representative to find the best route for your situation.