Home Equity Loans & Lines of Credit
North Country Savings Bank provides Home Equity Lines of Credit, as well as Home Equity Loans. These loans allow homeowners greater freedom in borrowing money. We want you to understand the differences before you apply for these loans. No worries, our Loan Originators are available to assist you.
What is a Home Equity Line of Credit (HELOC)?
A Home Equity Line of Credit (or HELOC), is a revolving line of Credit that functions in the same manner as a creditcard, but the borrower uses his or her home as collateral. Borrowers will be approved for a credit limit and may draw funds for a specified time period. This allows responsible borrowers access to funds to cover large-scale or ongoing costs.
Who should consider a Home Equity Line of Credit
Home Equity Lines of Credit were created for homeowners who need to pay the costs of major projects, such as a remodel or purchase of a second house. Because this loan is flexible and allows the borrower to access funds whenever they need it, it is crucial that the borrower exercise discretion and only spend what they are able to repay after the credit line ends.
Rates & features
North Country Savings Bank provides low-rate home equity loans of credit. Each customer’s financial history and needs are considered. Over five years, members who have the right qualifications can borrow as much as 80% of their home’s equity. Home Equity Lines of Credit have some benefits, including:
- Borrow money and pay back later, at lower rates than other forms of credit
- Tax-deductible interest can be earned by borrowers. Check with your tax advisor.
- Rates that can be adjusted
- No Closing Cost programs available
What is a Home Equity loan?
Home equity loans are also known as second mortgages. They allow homeowners to borrow a certain amount against their home’s equity. This means that you can borrow money from your mortgage to pay it back each month. These loans cannot be extended because they have fixed terms and payment.
Who should consider a Home Equity Lender?
Home equity loans are perfect for homeowners who have a clear goal such as roof replacement or a fixed-cost project such as college tuition. Homeowners can also borrow these loans to pay down high-interest debts like credit cards. A Home Equity loan could be the best option for you if you have a need for a large amount of money and can pay your second mortgage monthly.
How does a home-equity loan work?
You can use your equity in your home to get a home equity loan. You can borrow money for anything but home-related expenses. The money can be used to pay for your child’s college, their wedding, or a kitchen remodeling project.
Lenders must provide important information to you when you apply to a home equity loan. These include the amount you can borrow, interest rate (including whether it is variable or fixed), as well as any fees. Common fees in your closing costs can include an origination/underwriting fee, appraisal fee, document prep fees, broker fees and application fees.
Home equity loans are for a lump amount of money and typically come with a fixed rate of interest. You should pay attention to any fees the lender charges. They can vary greatly from lender to lender so it is wise to shop around for the best terms.
How do I repay my home equity loans?
A home equity loan will allow you to start making monthly mortgage payments. Repayment is the same as a traditional mortgage. Your loan payments will go towards principal (the amount you borrowed) or interest (the cost of borrowing money).
Are home equity loan a good idea?
Although home equity loans are not a good option for everyone and may not be the best choice for you, there are some situations where it might be worth considering.
You have enough equity in the home.
You can only borrow as much money as you have equity in your home. This means that you need to make sure you have enough equity to apply for a loan. Don’t forget that lenders limit your ability to borrow upto 85% of your equity. Consider how much equity you have. A larger down payment is likely to result in more equity.
You can qualify for a favorable Interest Rate
Lenders consider more than your home equity when deciding on how much money to lend and at what interest rates. Your ability to repay the loan is assessed by the lender. They can base interest rates on income, debt, and credit history. A lower interest rate may mean that you will pay less over its life.
You can manage the monthly increases in payments
If you borrow more money each month, you will have more to repay. A home equity loan could help you achieve your financial goals, provided that you are able and willing to pay higher monthly repayments.
Remember, however, that a home equity loan can be risky if your ability to pay the monthly repayments is not assured. You could end up losing your home if you can’t make the monthly payments.
What are other financing options available?
You may be able to borrow more money.
HELOC
The home equity lines of credit (HELOCs) allow you to borrow against your equity. However, the process is different. HELOCs work more like credit cards, and instead of borrowing money in one lump sum for a specific time period, they are more like credit cards. Instead of borrowing money in advance, you are given a credit limit. You can then draw on the line of credit as needed. Instead of how much you were approved to borrow, you will make monthly payments based on the amount that you actually borrow.
- HELOCs typically have a variable interest rate, which fluctuates based upon an index similar to the prime rate. You could be paying more if your interest rate increases.
- HELOCs require that you use your home to secure the loan. If you don’t pay the monthly payment on time, you may lose it.
- Your account may have a maximum or minimum withdrawal requirement. There may also be a draw period that limits the amount of funds you can withdraw. Your outstanding debt may need to be repaid immediately after the draw period ends, or over a longer period.
Cash-out refinance
Cash-out refinances may be an alternative way to access your equity. The mortgage refinance process will allow you to pay off your existing mortgage and get a new one. Some people refinance to lower their interest rates, switch to fixed or variable interest rates, or alter the term of their mortgage.
Cash-out refinance allows you to refinance your home at a higher amount than you currently owe on your mortgage. You can also receive the difference in a lump sum.
Unsecured personal loans
Unsecured personal loans are a good option if you don’t wish to use your home or other collateral as security for a loan. Unsecured loans allow you to borrow money with no collateral. Because these loans are considered more risky, the lender may charge higher interest rates.
Rates & features
North Country Savings Bank has competitive rates on Home Equity Loans. The rates are determined by each customer’s financial needs. The loan amount that can be borrowed is determined by the Loan Originators who examine each applicant’s financial history and credit score. The following are some of the benefits of these loans:
- A lump sum loan with lower interest rates can be taken.
- Tax deductions may be available for interest (consult your tax advisor).
- Fixed monthly payments made over a specified time period
