Can I Use Home Equity to Remodel?

When you’ve lived in your home for a while, two things occur. One is the need to remodel, and the other is the accumulation of home equity. Pose the question “Can I use home equity to remodel?” to the helpful professionals at Bellco Federal Credit Union, and you’ll quickly get a primer on the different ways to use home equity for financing. 

Your two basic options for accessing home equity to fund remodeling efforts are a home equity loan and a HELOC (Home Equity Line of Credit). Allow the professionals at Bellco FCU to guide you through determining which option may be better for you. 

As a not-for-profit federal credit union that’s owned by its members, Bellco FCU focuses on providing a wide range of financial services and products to those within Berks County, PA in an effort to improve the community’s present and future.

How to Take Advantage of the Equity of Your Home

When you’re planning to remodel your home, using the equity in your home is an excellent option. It really makes sense to take the equity and use it to enhance the home’s value even more. Since your equity is the difference between the actual value of your home and the balance on your mortgage, it’s akin to taking your profits and reinvesting in a business or other asset. 

Home Equity Loan

A home equity loan is basically a second mortgage. You’ll take out the equity as one large amount, repaying it in monthly payments. The amount borrowed, the interest rate and the repayment term will all be fixed. 

Home Equity Line of Credit (HELOC)

A HELOC also allows you to borrow using your home’s equity as collateral. The line of credit, however, functions in a cyclical manner. You borrow what you need, as you need it, up to a credit limit. The limit is usually up to 85% of your home’s equity. Since the borrowing is secured with collateral, the interest rate will be lower than that of most credit cards or other unsecured borrowing options. If your home remodeling projects will be completed in stages in an ongoing fashion, this option is likely the right one for your plans. 

To determine which option is best, and to help you work your way through the application process, Bellco FCU offers friendly and knowledgeable financial professionals. Your credit score, equity amount, debt-to-credit ratio, employment, income, and assets will all be relevant to the application process. These variables will determine how much of your equity can be borrowed and the interest rate that will apply to the repayment terms. 

Get the Process Started

To begin the process of funding your home remodeling with the equity of the home, you’ll need to establish membership with Bellco Federal Credit Union. If you reside, work, worship, or attend school in Berks County, PA, you’re automatically eligible. You will also be qualified to join if your sibling, parent, spouse, or child is a member. You’ll simply need to open a Member Savings account with a small deposit, starting the short process of membership establishment.

If you’ve been wondering if you can use home equity to remodel, the answer is yes. Find out more by discussing your situation with the helpful staff here at Bellco FCU.