Blog

If you’re a homeowner, you may have some equity built up in your home, maybe even significant equity. Tapping into that equity is one of the best options for borrowing money during normal circumstances, but with the current low rates and many people out of work and facing financial hardship, it might be something to seriously consider.

You may be looking to borrow money to cover income gaps during the COVID-19 pandemic. You may be looking to consolidate debt. If you’ve been able to maintain employment and don’t need to borrow money to cover bills or living expenses, now might be the right time for that much needed home update that could save you on bills and repairs down the road (when interest rates could be higher). Think leaky roof, windows that need replacing, installation of a new heating source.

Maybe you just want to know that you have money available if you should need it. Whatever your needs may be, you have a few options.

Home Equity Loan

A Home Equity Loan is just that, a loan for one lump sum. You borrow the money from the bank and make monthly payments to repay the loan. This is a better option if you know ahead of time how much money you will need.

Many Home Equity Loans have favorable terms as far as repayment, ranging from one to fifteen years.

One benefit of a Home Equity Loan is that you will have a fixed interest rate. A Home Equity Line of Credit is subject to fluctuations and can change. If you’re confident that you know how much you need to borrow and you’d like to lock in a low fixed rate, a Home Equity Loan would be a more secure option.

Home Equity Line of Credit

A Home Equity Line of Credit (also known as a HELOC) is a bit different. It’s a line of credit that is extended to you immediately with the ability to repay as you spend. In this way, a HELOC is similar to a credit card.

The benefit of this is that you can use only what you need, a little at a time, instead of borrowing more than you need or can afford to pay back. You also only pay interest on what you spend. This is the best option for “emergency” financing and unforeseen costs or a line of security for paying bills.

Terms will vary by bank, but at Citizens Savings Bank a person can borrow up to 80% of their home’s value, a much higher limit compared to a credit card. In fact, a HELOC’s limit can be as much as $150,000 - depending on the home’s value.

One notable difference to a Home Equity Loan is that a HELOC has a variable interest rate, so interest and payment could vary.

Now that you know the options, consider your needs. Do you know how much you’ll need to borrow and want to borrow it right away? Would you rather the flexibility to borrow as you need? If you need to speak to a Lending Professional, you can contact us at any time. 

Learn More

Citizens Savings Bank has multiple locations throughout Lackawanna, Wayne, and Monroe Counties. For branch locations and hours, visit our website. We also have a Customer Support Team ready to answer any questions you may have. Call us today at 1-800-692-6279 or email [email protected]. Member FDIC