The number of new families is constantly growing, and with more of the population eventually requiring some sort of home-related loan, it’s important to know what comes with it and how to get the resources to do so. Banks, financial institutions, and any organization that lend money continue to find new ways to advance loaning methods, including changes to the equity homeowners can take out of their property.
In this article, we will go over a few variations for these loan methods and which one could prove to be most suitable for your lifestyle.
Home Equity Line Of Credit
Also well known as a “HELOC”, a home equity line of credit is a revolving line of credit that essentially acts as a credit card for your home. You may borrow from it up to a pre-approved limit, pay it back, and repeat as many times as you wish. HELOC’s come with a draw period usually ranging from 5-20 years and are specifically designed for medium to long term home improvements where you’ll need to finance over time. Because a HELOC is unlike a Home Equity Loan which has a constant interest rate on a single loan, the interest rate can often change for HELOC users.
If you don’t have much equity to work with, a personal loan is another effective way to finance home improvement projects. With receiving a personal unsecured loan, your home is not used as a collateral, meaning you can receive this loan with less stress than a HELOC or Home Equity Loan. The interest rates are either fixed or varied and often cost more than either alternative options. Although some factors are not admirable as the process often treads on fine lines, the purpose of personal loans is for speedy accessibility and lack of home equity.
Home Equity Loan
Using a Home Equity Loan means you are borrowing the equity you have built up from your home. It acts as a second mortgage, where you pay a single sum of money (the total amount you intend to borrow) and pay it back monthly. A Home Equity Loan could be the best option for you if:
- You have plenty of home equity to spare.
- You have the funds for a single and large project.
- Want a fixed interest rate.
- Require 5-30 years for your project.
- You have a good credit score.
Leap Financial has over 20 years of experience in working with home renovation loans and home equity loans. We make it our specialty in making home renovations easier than ever. Check out why so many homeowners are taking the leap for their first Home Renovation Loan. If you have any questions, concerns or statements regarding Leap Financial and our services, please Contact Us for more information.