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Home Equity Loans (HELOC)

A home equity loan, also called a Home Equity Line of Credit (HELOC), is a type of loan that allows homeowners to borrow money by using the equity in their home as collateral. 

The equity in a home is the difference between the current market value of the property and the outstanding balance on any mortgages or other liens. With a home equity loan, borrowers can typically access a lump sum of money with a fixed interest rate and a set repayment term.

This type of loan can be used for various purposes such as home improvements, debt consolidation, or other major expenses. It is important to note that failing to repay a home equity loan can result in the loss of the property through foreclosure.

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What are the benefits of a home equity loan?

Home equity loans allow homeowners to borrow against the equity in their homes. The funds can be used for home improvements, which may increase the property’s value. Additionally, they can be used to consolidate high-interest debts into a single, lower-interest loan.

Home equity loans can also be used to cover significant expenses like education costs or medical bills. It’s essential to consider the potential risks involved, such as the risk of losing your home if you’re unable to repay the loan.

An additional benefit of a home equity loan is saving on your tax bill.  Interest on a HELOC may be 100% tax deductible.  Not all states or financial situations may allow this, please consult your licensed tax advisor for eligibility.

How does a home equity loan work?

Home equity loans can be a lump sum amount that you borrow and you repay over a fixed period of time at a fixed interest rate.  This type of loan might be good for a specific project where you have a set budget and know how much you need to borrow.  This type of loan does not have “open” access to equity in your home. 

A Home Equity Line of Credit (HELOC) is a revolving loan, just like a credit card.  You will have access to the funds anytime you need them, up to your approved line of credit.  Repayment terms are usually 5 or 10 years and you make a monthly payment based on the outstanding amount you have borrowed.  Interest rates on HELOC’s can vary from month to month.

If you need to know more about home equity loans don't hesitate to call First Choice Financial at (970) 683-1910.

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First Choice Financial

Grand Junction, CO

(970) 683-1910