You may have heard of home equity loans, but aren’t quite sure what they are. They’re actually pretty straightforward: you borrow money against the amount of equity you have in your home.

What is equity? Equity is the difference between the market value of your home and what you owe on your mortgage. For instance, if the market value of your home is $300,000 and you owe $100,000, you have $200,000 in equity.

How do I Use It?

There is a lot of flexibility in how you use a home equity loan, and they often used for a variety of reasons including making home improvements, paying off debt, making a key purchase, or even paying for an important life event such as a wedding.

Advantages of Home Equity Loans

Using a home equity loan can have several potential advantages:

• You can pay for big purchases little by little.
• The interest rate you pay on a home equity loan is often lower than those for credit cards or other types of loans.
• You can usually get access to funds quickly, sometimes within days of completing the loan documents.

• One thing you should keep in mind is that if you sell your home, the home equity loan would need to be paid in full at the time of the sale.

Is it Right for You?

If you’re interested in learning more about home equity loans, contact your American Federal Banker. They’ll help you determine if it’s the right solution for your situation.