Home Equity Loans

What is a Home Equity Loan?

A home equity loan is a fixed-rate mortgage product with a principal and interest payment, featuring terms up to 15 years. A home equity loan borrows against the portion of your home that you own through equity/appreciation (an increase in the value of your home over time) and previous payments on your mortgage. You have home equity when your home’s value is higher than what you owe on the mortgage. Then, you can borrow against that value to finance remodeling, educational or medical expenses, emergency situations, debt consolidation, and more.

Home equity loans offer benefits such as:

• Your money comes in one lump sum. You’ll get the value of your loan in one payout. This is particularly beneficial for homeowners who are looking to finance home improvement projects or individuals who are paying for medical expenses or a child’s college tuition.
• It’s a fixed, monthly payment. Your interest rate will never change, and you pay monthly, just the same as your mortgage. If you are using the funds from this loan to pay off debts, you may benefit from the single monthly payment structure.

What is a Home Equity Line of Credit (HELOC)?

While the lump sum payment of a home equity loan is great for projects with a set budget, many homeowners completing ongoing renovations know how difficult it can be to fully estimate expenses. When you need more flexible access to the equity within your home, a home equity line of credit may provide an ideal solution.

Home Equity Line of Credit (HELOC) offers benefits such as:

• Interest accrues only on the amount of money you actually use. For example, if your HELOC offers $20,000, but you only borrow $5,000, interest will only be paid on the amount you actually borrow.

Keep in mind that HELOCs offer variable vs. fixed rates. Your interest rate could rise over time, so you’ll want to keep a close eye on how much you’ve spent to better manage repayment.

• Draw funds when needed. A HELOC functions more like a credit card than a loan, allowing you to draw funds within specified limits and pay them back over time.

Smart Repayment Tips to Consider:

• With a Home Equity Line of Credit, the payments are initially interest-only for a 10-year withdrawal period. While this keeps expenses low at first, you may want to consider increasing your monthly payment to cover a portion of the principal (the amount you actually borrow).  After the initial ten-year withdrawal period, the line of credit will convert to principal and interest payments for a term of 10 years.

Apply for a Home Equity or HELOC Loan Today

If you’re interested in a home equity loan or HELOC from Community West, please contact us or chat online with a representative now. Our experienced loan officers will explain all your options and learn more about your financial goals to help determine which home equity solution is right for you. And with more than 50 years of experience serving communities throughout West Michigan, you can trust that Community West will guide you through the process every step of the way.

Ready to get started? Check out our current home equity loan and HELOC rates below, use our loan calculator to estimate monthly payments, and apply online today.