A home is a large asset that you can borrow a loan against. But did you know you can also take out a line of credit using your home equity? At Citizens Bank in Byhalia, MS, you can choose from a full range of financing options, including those listed above. But first, take a quick look at the key features of both in the sections below.
Home Equity Loan
With a loan, you are borrowing a fixed amount of money using your home equity as collateral. The equity is the total market value of your home minus what you still owe on the mortgage. So if the market value is $250,000 and you still owe $150,000 on the mortgage, you can borrow up to $100,000.
This option is ideal if you just need financing to make a large, one-time purchase. One of the more popular uses of a home equity loan is to consolidate debt. This is an especially good idea if you have a lot of high-interest debt like credit card debt. The interest rates are lower compared to other types of loans and the payments are fixed and predictable.
Home Equity Lines of Credit
Just like a loan, you can borrow up to the amount of equity in your home. But, you don’t get one lump sum. Instead, you are opening a line of credit. Essentially, it is a credit card secured by your home.
This is a good option for someone looking to open a line of credit because you can usually get a much lower interest rate than most credit cards. However, the rates will be higher and more variable than they are with a loan. But if you don’t just have one large purchase to make, you might prefer a line of credit so that you’ll have ongoing access to available funds when needed.
Whether you choose a loan or line of credit, you need to make sure you get the best terms possible. Talk to the experts at Citizens Bank by calling (662) 838-2146 or visiting their website to learn more about the financing options that are best for you. They’ve served northern Mississippi since 1919, so you can trust you’re in good hands.