Special article brought to you by Wasatch Peaks Credit Union

Considering some upgrades for your home? For many people, your home is a large piece of your net worth and, if you’ve already paid for your house or own a large equity, it can be your best financial asset to make home enhancements.

Using the equity that’s in your home to finance improvements is the cheapest way to increase the value of your holding. There are two major ways to utilize this equity, each with pros and cons that may make one a better fit for you. We’re here to help you decide between the two.

HOME EQUITY LINE OF CREDIT
The first is a home equity line of credit, or HELOC, which is a revolving credit line that allows you to borrow money as needed to a limit during a specified time period, with your home serving as collateral for the loan. At Wasatch Peaks Credit Union, we approve applicants for a specific amount of credit by taking a percentage of their home’s appraised value and subtracting the balance owed on the mortgage.

A HELOC will allow you more borrowing freedom than fixed home equity loans, with an extended draw period during which you can withdraw money as needed with spending flexibility. This helps when you are unsure of your projected budget and anticipate potential future needs. Don’t forget to consider interest rate fluctuation during the loan and prepare to budget for variable payments.

SECOND MORTGAGE
The second type is known as a second mortgage, which is also secured by your home’s equity and allows you to borrow a fixed amount that you receive as a one lump sum. This enables you to get all the funds right at once to get moving on your improvements! The amount you can borrow is like a HELOC as we can utilize a percentage of your home’s value, minus the balance of your mortgage. Most second mortgages have a fixed interest rate, a fixed term, and a fixed monthly payment. With a second mortgage, you have set terms and payments that won’t vary month to month and a consistent rate throughout the loan.

We recommend checking with your tax advisor because interest paid on this type of loan may be tax deductible. As you only receive one lump sum, you should consider your spending budget and responsibility.

So, let’s talk. You supply the ideas, and Wasatch Peaks can supply the loans to make your dreams a reality. Whether you’re wanting the deck of your dreams, to refresh a kitchen, or even to give the whole house a new paint job, we’re ready to help! Call our specialists at 801-627- 8700 or apply online at wasatchpeaks.com and start enjoying the equity in your home today.