Borrowing Against Your Home Equity: Weighing your Options

There are times that come up when we need money. The bathroom remodel is well overdue, your daughter is getting married, and your other children are heading for college. Whatever the situation may be, borrowing money against the equity of your house might be a good way to go.

Home equity lines of credit* (HELOC) and Home equity loans** (or second mortgages) are two options to consider and can possibly have a lower interest rate than a credit card or personal loan. Let’s look at their similarities and differences.

Home Equity Loan/
Second Mortgage


Home is used as collateral

Closing costs (average $250- $550)

Limits are based on Loan to Value (LTV) and owner-occupied status

Money can be obtained as needed over a period of time (like a credit card)

Money received in a lump sum

Rate is variable and may change over time

Fixed rate


When it comes to making a decision between the two, there are a few questions to ask yourself:

  1. Do I need a large sum of money now (i.e. wedding, a large remodeling project, high interest credit card pay-off)?
  2. Will I need money at regular intervals over time (i.e. college tuition, slowly updating my house)?

If you answered yes to #1, you will benefit most from a home equity loan/second mortgage. If #2 sounds more like your situation, you might consider a HELOC.

It’s very important to keep in mind that your house is collateral, which means if you default on your payment, there is a risk of losing your home. When you pay your high interest credit cards off with your home equity loan be careful not to run them up again, if you do you could be putting your home in jeopardy.

  Biggest tip: make sure that you only take out what is within your means to repay.

The rate is currently 5.5% on the HELOC and the five year fixed-rate second mortgage. Other rates and terms are available.  If a home equity loan/second mortgage or HELOC sounds like a fit for your needs, contact Firefighters & Company Federal Credit Union at 937-228-1614 today. We can help you decide which option is best for you.


*Home Equity Line of Credit (HELOC)- APR=Annual Percentage Rate. Rate as low as 5.5% based on prime, credit and 80% Loan To Value (LTV). Your individual rate will be based on credit, prime and LTV. The annual percentage rate may vary. Maximum rate is 18% APR. Prime is determined on the first day of the last month before a new quarter begins. The prime rate as of April 1, 2019 was 5.5%. Finance charges accrue as soon as an advance is taken. Minimum payment is based on a 120 month repayment; payments may change based on advances and/or rate changes. Minimum payment is $50 per month. Minimum HELOC is $5,000. Maximum HELOC is $100,000. Limits are based on LTV and owner occupied status. Up to 100% LTV is available based on credit, value and owner occupied status. Home value will be determined by the credit union using an approved valuation method. Draw period is 5 years with account review to determine extension. Offer good for qualified borrowers only. Home owners insurance is required on all Home Equity Line of Credit Loans. Closing costs can range anywhere from $75-$550.

**Second Mortgage-APR= Annual Percentage Rate. Rates as low as 5.5% APR based on credit and a five year term. As low as 5.50% APR based on 60 month term. For a $20,000 loan amount for 60 months with a 5.50% APR, the monthly payment would be $382.10. Other rates and terms available. Minimum Second Mortgage is $5,000. Maximum Second Mortgage is $150,000. Limits are based on LTV and owner occupied status. Rates are subject to change. Home owners Insurance is required on all Second Mortgages. Closing costs can range anywhere from $75-$550.

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