By Sandy Spring Bank
If you own your home, a home equity loan or line of credit is a smart way to use the equity in your home to fund large expenses, such as home renovation projects, college tuition or a new car. Here are five tips to help you better understand home equity and get the most out of your home equity loan or line of credit.
An equity loan is a term or closed-end loan, meaning you get all your money up front and make fixed payments over a set amount of time, with a fixed interest rate. Once you get the money, you cannot borrow further from the loan.
An equity line (HELOC) is an open-ended line of credit. You may borrow up to a certain amount for the term of the loan. During the term you can make advances for the amount you need at the time. As you pay down the principal you can use the line again, up to the end of the draw period. This gives you more flexibility than a fixed-rate home equity loan.
While home equity can be tricky, it is crucial to understand the meaning and difference between an equity loan and an equity line of credit. With the help of these tips, not only will you be able to understand, you will also be able to continue on your journey of homeownership with confidence. We are also available to assist you on this journey.
Learn more about Sandy Spring Bank's home equity options. »