You put a lot into your home. It’s time you got a lot out of it.
Whether you’re in the market for an equity line or loan, Chartway helps you put your home’s equity to work. With low rates and flexible terms, we help you choose the right home equity option to finance your dreams—whatever they may be.
Home Equity Loan vs. Line of Credit vs. Mortgage
Home Equity Loan
A home equity loan is only available to those who have already accrued equity in their property. They are usually referred to as second mortgages because most people get them in addition to a regular mortgage. The interest rates are typically higher and terms vary from 5 to 15 years.
The loan amount is determined by subtracting the property value from the mortgage balance and is secured by the resulting sum. Theoretically, if your property value is $250,000 and the remaining mortgage balance is $150,000 you should qualify for a $100,000 home equity loan. However, if your credit score is not in good standing you could only be eligible for a fraction of that.
A home equity loan is typically used for making property improvements or consolidating debt. E.g. Adding a garage, porch, renovating a kitchen, etc.
Questions about home equity loans?
Home Equity Line of Credit (HELOC)
Similar to a home equity loan, a home equity line of credit (HELOC) is only available if there is existing equity in a property. A HELOC loan works something like a credit card. You can borrow as much or as you need over a period of time, paying interest only on what you borrow.
Typically the draw period is about 10 years but can be as long as 20. The loan can be paid back in monthly installments or lump sums. One of the drawbacks to a HELOC loan is that it typically has a variable interest rate, however we also offer fixed rates for added flexibility and predictability.
A home equity line of credit is typically used for renovations with different lengths. E.g. replacing a bathtub vs. remodeling the kitchen.
Questions about home equity lines of credit?
Unlike the previous two a mortgage loan does not require equity in a property, but could require a large cash investment. On average lenders typically provide loans for about 80% of a homes appraised value, leaving you to provide the rest. FHA loans provide a little more, so don’t worry if you don’t have 20% to contribute.
The interest rates can either be fixed or variable with most people opting for fixed. You also have a choice in the term or payback period. Most mortgages offer either a 15 or 30 year term, with most people opting for 30.
A mortgage loan is used to purchase real estate property. E.g. house, condo, townhome, etc.