HELOC vs Home Equity Loan

There are two types of home equity loans – a conventional Home Equity Loan and a Home Equity Line of Credit (HELOC). If you have been thinking about tapping into the equity in your home, consider the financing options from Bellco Federal Credit Union.

Bellco FCU is a member-owned, not-for-profit federal credit union that caters exclusively to you and your needs and offers a variety of affordable financial services. We offer competitively low rates for home purchase, refinance, or construction, and have a number of home loan programs available.

Bellco FCU offers membership to people who live, work, worship, or attend school in Berks County. Open a Member Savings account with as little as $5, and establish your membership in a few simple steps. This is not a fee; it is a share in the credit union and provides you with voting rights and a say in any decisions we make. 

Even if you leave your current employer, retire, or move away, you can remain a Bellco FCU member for life. You will have access to your accounts from anywhere by mail, phone, fax, online and at thousands of ATMs across the nation.

About Home Equity

Equity is the portion of your home that you own compared to the portion you owe to the lender. In other words, if your home is valued at $250,000 and you owe $175,000, you have $75,000 in equity – or 30%. This means that you still owe 70% of the value of the home (known as Loan-to-Value.) Your equity can serve as collateral for a loan.

Home Equity Loans

A conventional Home Equity Loan is a loan that is paid back over a pre-determined amount of time. It is a second mortgage that is secured by the equity in your home and provides funds in a lump sum at a fixed rate for a fixed term (up to 15 years).

Use the funds to replace the roof on your home, finance a home improvement project, pay off other debts, pay for a major unexpected expense, and so on. The loan is repaid in budget-friendly fixed monthly payments, just like your original mortgage.

Home Equity Lines of Credit (HELOCs)

A Home Equity Line of Credit (HELOC), on the other hand, works very much like a credit card and can be used as you need the funds. The interest rate may be lower than that of traditional fixed-rate mortgages, credit cards, and other types of personal loans.

Unlike the conventional Home Equity Loan, the interest rate on the HELOC is adjustable (not fixed), which means it may change over the term of the loan.  

During what is called a “draw period” (typically 5 or 10 years), you can make as many withdrawals as you like up to your credit limit, if and when you need the funds. The HELOC can be an excellent solution when you need to borrow small amounts over a longer period, such as for an extensive home renovation project or to pay ongoing tuition fees.

Whether you are interested in a HELOC, a Home Equity Loan, or any other type of home loan, the locally-knowledgeable loan advisors at Bellco FCU will be happy to help!

Whether you are interested in a HELOC or a Home Equity Loan, the locally-knowledgeable loan advisors at Bellco FCU in Berks County, PA will be happy to help!