From Remodeling to Refinancing: What a Home Equity Loan Can Do For You

town of erie co homes

Are you planning to remodel your kitchen? Replace a roof? Improve your landscaping? No matter what projects you have on your to-do list, one thing’s for sure: It’s going to cost money.

If you’re looking for a way to achieve that goal of making your house the home you’ve always dreamed it could be, consider using the equity you’ve already built in your home. Home equity loans empower you to transform the equity in your home into money for other important purchases—like those updated stainless steel appliances or a new roof. Because your loan is secured by collateral (your house), the interest rates and terms on your home equity loan will be better than if the loan is not secured—that’s why credit card interest rates are higher.

And a home equity loan isn’t just for home-related projects. The possibilities are endless. Here are a couple more ideas:

  • Finance an education. Boost your earning power or help your children reach their goals.
  • Consolidate and refinance high-interest rate debt. Use the lower interest rate on a home equity loan to refinance high-interest loans, like credit cards, payday loans or other unsecured loans. With a lower interest rate, more of your payment will go toward paying off principal, so you can pay off debt faster.

Before you start your own season of Fixer Upper, take these three factors into consideration:

  1. Don’t get into debt you don’t know how you’re going to pay off. Make sure you’re comfortable with the monthly payment and have a plan to pay it off in a timely manner.
  2. Look at the change in your monthly payments and the amount of interest in the loan overall.
  3. Don’t just look at what your payment is today. What are the short- and long-term impacts of your loan? Have someone, like a Financial Solutions Guide at one of our branches, help you figure out what this decision means today, next year and four years from now.

So how does it work exactly? A home equity loan allows you to borrow against the equity you currently have in your home, with a variety of term options, and fixed and variable rates. Click here or contact us to learn more, and try our financial calculator to see how much you could borrow.

Author Ray Lindley

Read Ray’s blog for advice on applying for loans, your credit score and lending trends. As Chief Lending Officer, Ray leads Elevations’ consumer, retail, mortgage and business lending operations, and keeps a sharp eye on industry trends and lending news for the No. 1 credit union mortgage lender in Colorado.

More posts by Ray Lindley

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