Seems you’ve got a bit of a dilemma on your hands. That big project you’ve had in your head for what feels like forever is now actually coming together on paper and just waiting to be started. You have the time to do it and – best of all? – you want to do it. There’s just one problem. You need funds, because without them, your dream project stays on hold.
But fear not! If you’re a homeowner, and have equity in your home, you may have some options. One possible funding opportunity could be a second mortgage through access to your home equity. You may be able to take out what’s called a home equity line of credit (HELOC), or a home equity installment loan.
Unfamiliar with the idea of using your home‘s equity as collateral on a loan? No problem. Before you go any further with your plans, check out the Achieve Your Goals site. It’s a new financial resource from U.S. Bank. It’s a great resource with a variety of articles on financial topics such as home equity.
While the end result – access to funds – is essentially the same through both a home equity credit line and installment loan, and they both use your home as collateral, they are structured differently. So you’ll want to see which of these makes the most sense for your unique circumstances.
On the other hand, a HELOC or Home Equity Loan may not be the right move for you if:
- You plan on moving soon. You’ll need to pay back the line or loan when you sell your home.
- You might not be able to afford monthly payments. Remember your home is used as collateral.
With a U.S. Bank home equity line of credit, you may be able to borrow funds (up to the limit on your line of credit) on an as-needed basis to finance what you want, when you want, without having to reapply. For example: buying a new vehicle, consolidating debt or a starting a home remodeling project. There’s no need to reapply as the need for funds arises (as long as you don’t exceed your amount of credit). Also, HELOC interest rates tend to be lower than credit cards or unsecured loans.
Home equity loans
A home equity loan is essentially an installment loan. You apply for a specific loan amount and make monthly payments to pay it off. A home equity loan can be a great way to consolidate debt or pay for a one-time expense like that big project that’s begging to be finished. A U.S. Bank home equity loan can be a great way to go: competitive rates, low monthly payments and the bonus of potential.
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