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Greenville, PA
724.588.5420

Hermitage, PA
724.983.1466

Neshannock Twp, PA
724.652.5820

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What Is A Home Equity Loan?

A home equity loan, also known as a second mortgage, allows you to borrow a large sum of money by using your home/property equity as collateral.

How Home Equity Loans Work

It works like this: if the value of your home is worth $200,000 and you still owe $150,000 on your mortgage, your available equity to borrow is $50,000 [1].

Benefits Of A Home Equity Loan [2]

  • Easier to qualify for than other types of loans
  • Low, fixed interest rates and monthly payments
  • No restrictions on how you can use the funds
  • You can access large sums of money immediately

Why People Get A Home Equity Loan

Here are some valid reasons why you might benefit from a home equity loan:

  • Weddings
  • Major home renovations
  • Pursuing a college education
  • Debt consolidation
  • Emergency expenses (job loss, medical bills)
  • Certificate of Deposit

Remember, a home equity loan is still a loan that you will need to pay back. These loans serve best for purchases that will have a positive financial return in the long run. To stay out of debt, and to avoid losing your home, do not use a home equity loan for:

  • Expensive vacations
  • Luxury cars
  • Designer clothing
  • Paying off credit card debt

How To Know If You Qualify For A Home Equity

A lender will determine your financial responsibility by appraising your house, calculating your debt-to-income ratio (which compares your monthly debt payments to your monthly income), and checking your credit card score [2]. If a lender determines you will be a responsible borrower, then they will approve your loan request.

If you are interested in discussing a home equity loan, contact your local Greenville Savings Bank today!

References

1. “What are the Benefits of a Home Equity Loan.” Discover.com
https://www.discover.com/home-loans/articles/benefits-home-equity-loan/

2. Dehan, Andrew. “Home Equity: A Complete Guide.” Rocketmortgage.com
https://www.rocketmortgage.com/learn/home-equity-loan