Credit Unions in Berks County, PA That Offer Home Equity Loans and HELOCs

Are you considering leveraging the value of your home to borrow money? Credit unions in Berks County, PA that offer home equity loans and HELOCs, including Bellco Federal Credit Union, can provide funding when you need it, usually with lower interest rates than those you would find with unsecured borrowing options like credit cards.

Understanding Home Equity Borrowing

Home equity loans and Home Equity Lines of Credit (HELOCs) are both types of borrowing that utilize the borrower's home as security. The security is based upon the equity value of the home. Equity refers to the value of the home that the homeowner owns. To calculate this value, you would subtract the balance left owing on the mortgage from the appraisal value of the property. This difference is the home’s equity, and the homeowner can usually borrow up to 85% of this amount, depending on credit and other factors.

Secured borrowing, like Home Equity Loans and HELOCs, generally have lower interest rates than unsecured borrowing, like credit cards, signature loans, etc. This factor doesn’t mean that borrowers should take the occasion lightly, though, since failure to repay will result in foreclosure of the home.

Key Features of a Home Equity Loan:

  • Commonly called a second mortgage

  • Consists of fixed payments, a fixed interest rate, and a fixed term for repayment

  • Comes as a single bulk amount

  • To qualify, the first mortgage’s balance needs to be substantially less than the appraised value

  • Fixed amount decreases propensity for impulse purchases and makes budgeting repayment easier

  • Ideal for homeowners with a single, large expense or one-time payment

Key Features of a HELOC (Home Equity Line of Credit):

  • Functions as a revolving line of credit like a credit card, permitting homeowners to spend up to the credit limit, make payments, and spend again

  • Spend as much or as little as you need; funds available for emergencies

  • Comes with variable interest rates for variable monthly payments

  • Consists of two set terms: the draw period allows for spending and repayment requires complete payment of the balance without any new spending

  • Draw period payments are generally interest only; homeowners should prepare for the dramatic increase to the repayment schedule

Choosing between a Home Equity Loan and a HELOC

Homeowners who are deciding how to better use their home equity should consider their purpose for borrowing. HELOCs, for example, are great for home improvement tasks because the borrowing can be limited to what’s needed, which can be difficult to estimate before the project begins.

Other situations like tuition, high-interest debt consolidation, or fixed packages for vacations where you know the exact amount needed are better suited to taking out a Home Equity Loan.

A HELOC can be revoked. When situations make the line of credit inappropriate, it can be taken away. These instances could include job loss, a decreased credit score, and a decrease in the value of the home in question.

Ready to Secure Home Equity Funding?

If you’re ready to secure a home equity borrowing product, consider Bellco FCU. We offer excellent rates and a hometown congeniality you won’t find elsewhere.

As the best among the credit unions in Berks County, PA, that offer Home Equity Loans and HELOCs, Bellco FCU awaits the opportunity to help homeowners become joint members/owners in the credit union and leverage the equity in their greatest asset to financial life’s expenses.