There are two basic types of home equity loans; closed-end and open-end. Both are based on the equity of your home. Equity is simply the difference between what you owe on your home and its appraised value. So if you owed $80,000.00 on your home and it appraised for $100,000.00 you would have $20,000.00 in equity.
When you do a closed-end home equity loan you receive the loan amount in one lump sum.
Open-end home equity loans (referred to as home equity lines of credit or HELOC’s) on the other hand allow you to make withdrawals from a line of credit as you need. Just like a closed-end loan the loan limit is based on the equity you have in your home. HELOC’s provide flexibility. If you have a HELOC for $50,000 you can use as little or as much of it at a time as you need; for example maybe one of your kids needs braces or you want to fence your yard or finish your basement. With a HELOC you withdraw only what you need and pay it back in monthly installments. HELOC’s are great because they make life’s unexpected turns more manageable. A HELOC can also be used to consolidate debt into one easy-to-manage monthly payment.
Knowing the type of loan you need can be tricky, but UCCU has specialists at every branch who can help you navigate the choices so you can save money.
One of the benefits of a recession like we’ve been having is that rates on loans, especially home loans, are at historic lows. Right now UCCU’s rates on Home Equity loans are as low as 4.00% variable APR. There are no closing costs or maintenance fees. To learn more about home equity loans and home equity lines of credit call one of our Home Equity Loan specialists today. Call 801-223-7650.