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Whether you are on the path to becoming a homeowner or are curious about the financial factors that owning a home involves, understanding home equity and how to use home equity is essential for many reasons, including developing wealth in the future. Many aspiring homeowners may not be aware of all of the benefits of home equity or may want to know how does a home equity line of credit work and if you’re one of them, we’re here to help outline what you need to know.
What is Home Equity?
Home Equity is a simple equation. It is the current value of your home subtracted by how much you still owe on your mortgage. When this number is positive, it means equity is growing. The growth of your home equity is dependent on your property’s value as well as how much money you put down on your mortgage. It’s important to note that building home equity takes time: the longer you are in your home, the more your equity grows. Growing home equity can be useful for a handful of reasons, such as financing home improvement projects or for refinancing means. A popular tool that most homeowners take advantage of is a Home Equity Line of Credit.
How Does a Home Equity Line of Credit Work?
Most commonly referred to as “HELOC”, a Home Equity Line of Credit differs from traditional home equity loans. Similar to the way a credit card works, a HELOC allows individuals to borrow finances at their leisure while granting the ability to make online payments on the borrowed amount as opposed to the full amount. There are even certain tax advantages that most loans may not include. A HELOC is ideal for individuals who want access to funds when they need it at the amount they require. You can rest assured that when you need to make home renovations or even in the event of an emergency, having a dependable Home Equity Line of Credit can benefit you greatly.
Do you require further information about how to use home equity or want to know where to get a home equity loan? Did you know you can apply for a home equity loan from a credit union? At BHCU, our Home Equity Line of Credit plan offers members an abundance of benefits, including easy access to your Line of Credit multiple ways and the ability to make withdrawals at your own discretion. You can count on BHCU to assist you with numerous finances related to owning a home. Find low fixed monthly payments, competitive rates, and more with BHCU’s Home Equity Loans on our website. Contact us today for more information.
