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A home equity loan and a cash-out refinance are two ways to access the value you have accumulated in your home. Which one is better? The experts at Bellco Federal Credit Union explain.

Bellco FCU is a member-owned, not-for-profit federal credit union. Since 1938, when we were called the Bell Telephone Credit Union, we have provided unique financial products and services to individuals and small businesses in Berks County.

Whether you are looking for home equity loans, fixed rate mortgages, auto loans, credit cards, a fee-free checking account, or an excellent savings program, we are available to help at every important stage of your life.

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Ways to Tap into Your Home's Equity

If you need cash for any reason, such as to remodel your home, pay college expenses, buy a car or pay off debt, your home may be the best place to find it. With a cash-out refinance or a home equity loan or line of credit, you can use your home as collateral and get the funds you need.

Although home equity loans and cash-out refinancing are similar, they’re not the same.

Refinance a first mortgage:  A cash-out refinance replaces your current mortgage with a new loan term, interest rate and monthly payment. In general, this can be a good option if you can take some cash out while lowering the interest rate on your first mortgage, especially if you plan to use some of the cash to get rid of higher-interest accounts like credit card debt.

Home equity loan: Home equity loans are “second mortgages.” The funds are provided to you in one lump sum, and then you make monthly payments to pay it back. Home equity loans typically come with higher interest rates than cash-out refinances. If today’s mortgage interest rates are higher than the rate on your existing mortgage, however, a home equity loan may make good sense.

Home equity line of credit (HELOC): A HELOC works very much like a credit card and you can withdraw what you need, when you need it. The interest rate may be lower than that of traditional fixed-rate mortgages, credit cards, and other types of personal loans. The loan can be particularly convenient when you need to borrow smaller amounts over a longer period, such as for college tuition payments or an ongoing home renovation project.

The knowledgeable loan professionals at Bellco FCU will evaluate your credit worthiness based on your income, assets, debts and past credit use and help you determine how much you can afford to borrow.

How to Get Started

Membership in Bellco FCU is open to people who live, work, worship, or attend school in Berks County, PA. Simply open a Member Savings account with as little as $5, and set up your membership in a few simple steps.

Once you are a member, your immediate family members will be eligible to join too and take advantage of competitive rates for mortgages, personal loans, credit cards, and the many other services we offer.

If you are wondering whether it’s better to get a home equity loan or refinance your mortgage, Bellco FCU has the tools, information and expertise to help you make the right decisions. Contact us today to learn more!

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