Home Equity Loan: Is it right for you?

As a homeowner, you may be wondering how you can get more out of your home.  You’ve invested time and money into your house, so now, how can you make it work for you?

A home equity loan can be used virtually for any purpose, including debt consolidation, a child’s education – even a vacation. If you qualify, you can borrow up to 80% of your home’s appraised value in total loans.

How do home equity loans work?

With a home equity loan, you use the equity you’ve built up in your home over time—the portion of your home that you own after making mortgage payments—as collateral for borrowing money. With a home equity loan, you get all the money you’re borrowing up front, and then pay it back over time.

How do I know if a home equity loan is right for me?

When considering a home equity loan, there are a few things you should consider:

  • When you’ll use the money: When you have a specific large expense that you’re looking to pay for by borrowing—such as college tuition or a major home renovation—a home equity loan can be effective in ensuring that you’ll have the money you need.

On the other hand, if you don’t know exactly how or when you’ll need the money—for example, if you have multiple major expenses coming up—a line of credit might be a better option to give you the flexibility you may need.

  • How you pay to use the money: Because you do all your borrowing at once with a home equity loan, its interest rate is fixed, so it doesn’t change over the life of a loan. You have the peace of mind knowing exactly how much you have to pay.
  • How long you’ll have to pay it back: With a home equity loan, you borrow the money in a lump sum up front, and repay over the term of the loan, which can help with long-term budget planning. (At FCB, you can choose a term of 5, 10 or 15 years but prepay your loan earlier without penalty.)


Still not sure whether a home equity loan makes the most sense for you? Speak with your FCB banker to learn more about our other great financing options.