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FAQs
Q. Why is home equity the best financing available?
A. Interest rates for home equity loans and lines are typically lower than other forms of credit. This ultimately means a lower cost to you. Furthermore, the interest you pay on home equity accounts may be tax deductible. Consult your tax advisor regarding tax deductibility of interest.
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Q. What can I use my home equity account to finance?
A. Home equity is a great vehicle to finance anything. With low interest rates and potential tax deductibility, home equity is the smart way to pay for home improvements, education expenses, purchasing a new car, buying a second property or consolidating higher interest rate balances.
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Q. What is a home equity loan?
A. A home equity loan is similar to a mortgage loan in that it is secured by residential real estate, typically your home. The loan amount is given to you as a lump sum at the time you close on your loan. You repay the loan in monthly installments for an agreed upon term, usually for a period of 5 to 20 years.
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Q. What is a home equity line of credit?
A. A home equity line of credit is the most flexible type of consumer credit offered. It is a mortgage on your home, but similar to a credit card, it is a variable rate, revolving line of credit. This means you have a specific credit limit you can borrow at your discretion, and when you make payments your borrowing power is replenished up to your available credit limit.
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Q. What is the difference between a home equity loan and a home equity line of credit?
A. Both home equity loans and lines of credit are mortgages on your home, but typically chosen for different uses. An installment loan gives you the entire loan amount up front and is often used for major purchases, like a car, or new appliances. The loan is simply repaid over a specific time period and you have no further access to additional funds. A line of credit provides you a financial tool that you can use whenever you need it. Borrow as much as you need, up to your maximum credit limit, whenever you need it. Lines of credit are perfect for managing your monthly expenses, especially for large projects like home improvements, or in case of an emergency. A line of credit gives you a specific amount of credit you use when you need it.
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Q. Is the interest tax deductible?
A. Interest may be tax deductible on loan amounts that are less than 100% of the value of your home. Consult your tax advisor to confirm tax deductibility.
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Q. When are my payments due?
A. When you schedule your closing, you will have the opportunity to select the date that your monthly payments will be due.
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