Home Equity Loans

How They Work
A homeowners' line-of-credit could be a first or second charge on a property. You use your home as collateral for the loan. You do not have to draw the money until you need it. You can draw all or part of it at any time and pay some or all of it back as you wish. Think of it as an emergency cash stash.

How Much Can You Get?
A Home Equity Loan is set up similar to a conventional mortgage. A PenFinancial Credit Union Lender will set a limit, usually from two-thirds to three-quarters of your home's value. This limit includes whatever mortgage remains on your house. Let's say your home is worth $130,000 and you have $80,000 left on your mortgage. The difference between your mortgage and 75% of your home's value ($97,500), is $17,500. You should be able to obtain a line-of-credit of $17,500 providing you meet certain lending conditions.

Interest Cost and Service Fees
The interest rate on a PenFinancial Equity Line-of-Credit floats with prime. Service fees for setting up this type of credit vary, but are similar to a mortgage. A good way to reduce these costs is to arrange your Home Equity Line-of-Credit at the same time you are arranging your mortgage or refinancing your mortgage.

What can you use a Home Equity Line-of-Credit for?
A Home Equity Line-of Credit is ideal for someone who wants to take advantage of investment opportunities, perhaps in the stock market, home renovation projects, children's education, medical expenses and other undertakings where irregular bills have to be paid. The advantage of this kind of borrowing over a regular loan is that you don't have to take a large lump sum. You only draw the amount you need, when you need it. Your PenFinancial Loans Officer would be pleased to answer any questions you have about obtaining a Home Equity-Line-of-Credit.