Home equity: A powerful tool

For more information on HELOCs, check out our downloadable guide.

Spring is finally here, the weather is warming up, and that means it’s time to tackle the special projects you’ve been dreaming of all winter. This could be the year you get that patio project going, take that vacation to a faraway land, or enjoy time with friends and family at the wedding of your dreams. No matter what’s on your to-do list, you can start moving projects from “to-do” to “done,” thanks to a powerful tool that’s at your fingertips: your home’s equity.

What is home equity?

Home equity is the amount of your home that you “own,” thanks to your down payment and monthly mortgage payments. Your equity increases over time as your property value increases or as you continue to pay down the balance on your mortgage loan.

For example, let’s say you purchased a home for $250,000. At the time of purchase, you put $50,000 toward the down payment and have since paid an additional $10,000 in principal off your mortgage loan. Assuming the value of your home hasn’t changed, this means that you have $60,000 of equity in your home.

Utilizing the power of a home equity line of credit

Building equity in your home is important for a variety of reasons, one being you can borrow against it. Savvy homeowners use the equity in their home for a number of life’s necessities (and luxuries) — educational expenses, vacations, weddings, emergency funds, and home improvements, to name a few. One of the ways to do this is through a home equity line of credit, or HELOC.

A HELOC is similar to a credit card (but very likely with a lower interest rate). It’s useful for situations where you’ll need funds over a longer period of time and not a large lump sum up front. And those funds are easy to access, too: We can issue a debit card that’s attached to your HELOC, and you’ll have 24/7 access via UBTgo.

HELOCs have many benefits:

• Access to funds when you need it
• You only pay interest on the amount you use
• Potentially lower interest than other lines of credit
• Flexibility to repay over a longer period of time
• An easy-to-follow process, thanks to UBT

A HELOC allows you the freedom and flexibility to tackle one or multiple projects over a longer period of time without having to reapply for funds. It’s a line of credit that allows you to use the funds as you need them — and what could be easier than that?