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How to use the equity in your home: Home Equity Loans vs HELOCS

How to use the equity in your home: Home Equity Loans vs HELOCS

Last year, the average U.S. homeowner held roughly $199,000 in equity. Not bad, huh? If you’re sitting in a similar spot this year, you might wonder how to access your funds. Let's break down two popular options: the Home Equity Loan and HELOC.

Home Equity Loan

  • Similar to a second mortgage.
  • You receive a lump sum using your equity as collateral.
  • Fixed interest rates mean predictable monthly payments.
  • Ideal if you need a specific amount all at once.

Home Equity Line of Credit (HELOC)

  • Works like a credit card but with your home as security.
  • Allows flexible borrowing up to a set limit during the draw period.
  • Initially, you only pay interest on the amount you borrow.
  • After the draw period, you start repaying the principal and interest.
  • Comes with variable interest rates so that payments can vary.

The bottom line?

  • Need a large sum immediately? Consider a Home Equity Loan.
  • Prefer flexible access to funds? A HELOC might be your answer.

If you're thinking about how to tap into your home equity, feel free to contact us. Let us help you find the strategy that aligns with your financial goals.

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