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Home Equity Loans & Lines of Credit

A home equity loan or line of credit can be a reliable money source for large expenses like home improvements, emergency home repairs or medical expenses, and even college tuition, among other things.  For many people, a home equity loan can have tax advantages, but you should always consult with your tax advisor for your particular situation.

What exactly is equity?

Equity refers to the value in your home minus the owed mortgage balance.  A down payment on your home is automatic equity.  As you pay down your mortgage loan and money is applied to the principal, you are increasing the value---the equity---in your home.  That equity can be used in the form of a line of credit or loan.  Use the table below to calculate your equity.

Calculate Your Equity
  Example Your Values

Your Home's Current Market Value

$250,000 $ _________
Your Current Outstanding Mortgage Balance - $150,000 $ _________
Any Outstanding Home Equity Balance(s)  - $25,000 $ _________
Total Equity $75,000 $ _________

 What is the difference between a Home Equity Loan and Line of Credit?

A Home Equity Loan allows you to borrow a set amount of your equity in one lump sum, paid back in installments over a term.  You would then take all or a portion of your equity amount as one loan and make monthly loan payments over 5, 10, or 15 years.  A Home Equity Loan is a great solution when you are making a one-time investment in a home improvement like a remodeled kitchen or paying off higher interest debts.

A Home Equity Line of Credit (HELOC) allows you to borrow up to a certain amount of your equity and then have repeat access to those funds as you pay them back.  A HELOC usually remains open for a set period of time, know as the "draw period", at Hoya the draw period is 10 years.  This revolving access makes a HELOC a perfect safety net for emergencies and for large recurring expenses like college tuition.  Because the loan is secured against the house, the interest rate is lower than traditional loans or credit cards.

How much can I borrow?

At Hoya Federal Credit Union you can borrow as much as 80 percent of the equity (80% Loan-To-Value) you have in your home, up to $150,000. 

 Calculate Your Borrowing Potential
What is the value of your home? $100,000 $ _________
Loan-To-Value ( 80% LTV) x  0.80 x  0.80
Maximum Loan-To-Value (LTV) $80,000 $ _________
Current Mortgage Balance -  $50,000 $ _________
Maximum Loan Amount $30,000 $ _________

 Your home is probably your biggest asset, so it's important to understand how to evaluate its work, and how and when to use its value to accomplish your financial goals.  if you're considering borrowing to fund a big ticket item, perhaps a home equity loan is right for your.

You can learn more about your options by calling our Loan Officer, Tamica Drake at (202)687-8175.  She'll be happy to explain your options and help you get the most out of your home's equity.