Home Equity Loans and Lines of Credit

A home equity loan allows you to access money by borrowing against your home’s equity. Your equity is the difference between the amount you owe on the mortgage and the value of the home. Generally, over time people build equity as they continue making mortgage payments. This assumes the market value of their home holds steady or increases over the same time period.

A home equity loan provides a fixed amount of money that you receive at one time. Interest on this type of loan is often fixed and you pay interest on the entire loan amount. Monthly payment amounts stay the same for the life of the loan.

A home equity line of credit or HELOC is a revolving line of credit you can draw on as needed. The interest rate is variable but you only pay interest on the money you use, not the amount you can access.

First Tech offers two different types of home equity loans. The Flexity Line of Credit allows you to apply for a line of credit based on the value of your home. This line of credit gives you access to money when you need it. First Tech also offers fixed-rate home equity loans with terms of 5 to 20 years with a fixed interest rate and monthly payments.

Your maximum loan amount will be based on the value of your home and other variables like how much you still owe on the home, debt-to income ratio, and ability to repay the loan. We’ll have a new interactive home equity calculator coming soon. In the meantime, schedule an appointment with one of our Home Equity Loan Officers for an estimate.

Interest rates on home equity loans and lines of credit may be lower than other types of loans, especially those that are not secured with collateral. You may be able to use a home equity loan or line of credit to pay off debt with a higher interest rate, allowing you to pay less interest. There may also be tax advantages to taking out a home equity line of credit; consult with a Certified Public Accountant (CPA) to learn more.

On a home equity line of credit, the typical draw period is between 5 and 15 years. First Tech’s Flexity Line of Credit allows for a 10 year draw period, during which you are making interest-only payments. You can also make payments to the principal during the draw period to reduce the overall loan balance. Once the draw period has ended, you’ll no longer be able to access additional funds and you’ll need to start making principal payments. If being able to pay off the loan early is important to you, be sure to look for a lender that allows you to do this without pre-payment penalties.

Carefully consider how much you need to borrow. If a lender pressures you to borrow more than you need upfront or monthly payments that you can’t make comfortably, you may wish to take your business elsewhere. Read all disclosures and fully understand the terms of the loan. Obtain and keep all copies of loan documentation.

Home equity loans may not be right for people who are only looking to borrow a small amount of cash. The upfront costs for a mortgage can be higher than other types of loans. If you’re having trouble making ends meet or needing money to pay for regular daily expenses; taking on additional debt of any kind may be challenging. A home equity line of credit is a variable interest rate product tied to the Prime Rate. This means payments will fluctuate and it can be difficult to manage if your income changes from month-to-month. 

You can apply for a First Tech home equity loan through our online application. Not ready to apply yet? Schedule an appointment to speak with one of our Home Equity Loan Officers to discuss the home loan that best fits your needs.