How to Make Your Home’s Equity Work for You

Mar 09 2022

Home Equity

If you have big dreams, your home’s equity can help you stop dreaming and start doing!

You can use your home’s equity – the difference between your home’s value and what you owe your lender – to take out a loan or line of credit. A home equity loan or credit line isn’t just for renovation projects (although, if you’re dreaming of turning your home from “not quite” to “just right,” a home equity loan or line can help you with that, too!).

A home equity loan or line of credit can help you with anything from consolidating debt and paying medical bills to funding a major purchase – like a dream vacation, wedding or college costs.

What makes home equity loans and credit lines at Bell attractive – especially when home values are increasing and rates are low, like they are now – is:

  • Because they’re considered secured financing, they typically have lower interest rates than unsecured loans
  • There may be tax advantages of financing a loan secured with your home (Check with your tax advisor.)
  • They do not have a prepayment penalty

To figure out your home equity, take the current market value on your home minus the balance you still owe on your mortgage. At Bell, we base it on your home’s tax-assessed value. If you think your home is worth more, you can pay to have an appraisal done.

 

Home Equity Loan vs. Home Equity Line of Credit

A home equity loan is a lump-sum, one-time loan with a fixed interest rate. You pay off the loan in fixed payments.

  • Home equity loans are often used for consolidating debt or funding a major purchase without taking out a personal loan or putting it on a credit card.

home equity line of credit makes funds available for up to 10 years. You can use the money anytime, and you pay interest only on what you use. The interest rate varies, but it’s much lower than what you’d typically pay on a credit card.

  • Home equity lines are often used as financial safety nets, providing funds for unexpected expenses such as a major home repair or medical emergency.

 

Applying for a Home Equity Loan or Line of Credit

If you have questions or you’re ready to make your home’s equity work for you, just call any Bell Bank location. We generally will need:

  • Personal financial information
  • Income verification
  • Outstanding mortgage balance
  • Estimated home value

There are no annual fees, but there are fees to process the loans and lines. If you sell your home before the line’s time limit or before you’ve paid off your loan, you will need to use the sale’s proceeds to pay off your loan or line.

 

Learn more, or call a personal banker for the loan you need.