Which is Better: HELOC or Home Equity Loan?

Wondering whether to do a HELOC or traditional Home Equity Loan? The experts at Bellco Federal Credit Union can help you decide which option is better based on your unique circumstances.

Bellco FCU is a member-owned, not-for-profit federal credit union that has been offering unique financial products and services to people and small businesses in Berks County since 1938.  

About HELOCs

A HELOC (Home Equity Line of Credit) gives you access to a line of credit with a set limit, much like a credit card. The amount of the loan is determined based on the appraised value of your home, minus the balance due on your mortgage. 

Once your loan application is approved, a specified amount of revolving credit is made available to you for a limited time period (typically 5 or 10 years). Unlike the traditional 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,” you can withdraw funds from the line of credit as you need them. As you pay off the principal, your credit revolves, and you can use it again and again for the duration of the draw period.

A HELOC offers a variety of benefits:

  • Withdraw what you need, when you need it

  • Pay interest only on what you withdraw 

  • Withdraw funds by check, online access, telephone access or branch access

  • Repay the principal and reuse the funds again and again during the draw period 

  • Use the funds for periodic expenses, such as emergency funds, debt consolidation, tuition, and home improvements

  • Local Pennsylvania decision-making and processing 

  • Bellco Loan Protection is available

About Home Equity Loans

A traditional 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.

Can You Join Bellco FCU?

You are eligible to join Bellco FCU if:

  • You live, work, worship, or attend school in Berks County, PA;

  • You are in the immediate family (spouse, parents, children, siblings, grandparents) of a Bellco FCU member, no matter where you live.

By opening a primary savings account with as little as $5 and following a few simple steps, you can quickly become a member. And, once you join Bellco FCU, you can remain a member for life, whether you change jobs, retire, or move out of Berks County. 

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 you decide which one is better for you.