Home Equity Repayment Terms, and how They Differ by Loan Type.
When it comes to using your home’s equity, home equity loans and home equity lines of credit (HELOCs) are popular options, but their repayment terms vary significantly.
A home equity loan functions much like a traditional mortgage, offering a lump sum that is repaid over a fixed term with a set interest rate. This equates to predictable monthly payments for the duration of the loan.
Home equity lines of credit (HELOCs) offer more flexibility, allowing homeowners to draw funds as needed up to a certain limit and only pay interest on the amount they use. HELOCs typically have a variable interest rate and interest-only payments during the draw period, followed by a repayment period where the homeowner pays back the principal and interest. This can cause HELOC payments to fluctuate from month to month.
Choosing the right loan type depends on your financial situation, how you plan to use the funds, and how you prefer to manage repayment. NIHFCU’s home loan specialists can help you navigate these options, and make an informed choice.
Rates, fees and terms as of April 28, 2024 and subject to change without notice
