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Home Equity Loan

With a home equity loan, you can leverage the equity in your home to obtain financing for a variety of needs.
A home equity loan is a short-term loan where you borrow against your home’s equity to meet a financial need. It could be used for any number of expenses such as education, home remodeling, medical bills, and debt consolidation.
They are similar, but not the same. With a home equity loan, you borrow a fixed amount of money and use your house as collateral to secure the loan. A home equity loan typically has repayment terms of 5 to 15 years.

With a Home Equity Line of Credit (HELOC) you can secure a revolving line of credit, using your home as collateral. You can tap into a HELOC as needed, up to your line of credit, and pay off the loan in monthly installments. You can use this money for any number of expenses, such as home remodeling or paying off credit cards.

You can draw on these funds as needed throughout your HELOC’s draw period, which is typically 10 years, with a repayment period of up to 20 years.

Both home equity loans and HELOCs typically have a lower interest rate than many other types of loans. The IRS says the interest payments on both equity loans and HELOCs are tax-deductible “if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan” and meet other requirements.
If you need to borrow against your home’s equity, your local Union Bank can help.

To apply for a home equity loan, you will typically need:
  • At least 20 percent equity in your home, which is the difference between how much you owe on your mortgage vs your home’s market value.
  • A good credit score of at least 600 and a good payment history on loans and bills.
  • Proof of income and a low debt to income (DTI) ratio. To calculate your DTI, divide your total monthly debt payments by your gross monthly income, then multiply by 100.
For more information, or to apply for home-equity loan, you can contact us online or visit one of our 10 Union Bank branches in West Central Arkansas and the River Valley: Mena, Paris, Wickes, Hatfield, Caulksville, Clarksville, Ozark, Waldron, Booneville, and Russellville.