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Home Equity Loan vs. Line of Credit


Need cash in 12 days? Own a home?

GTE Financial can close your Home Equity Loan in 10-12 days.*

Plus…earn Go Points

  • 9,000 points with a Home Equity Loan** - $90 value
  • 5,000 points with a Home Equity Line of Credit (HELOC)** - $50 value

Home Equity Loan

A Home Equity Loan is a 7 or 15 year fixed rate loan that provides a lump sum amount at one time. This is very similar to a regular mortgage or auto loan. You qualify for a specific amount and pay it back according to a set schedule. This type of loan is usually the best choice when you know how much you need and want the ability to pay over a long period of time.          

         Rates as low as 3.97% APR***

Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) is a line of revolving credit with an adjustable interest rate, great for short-term borrowing or unexpected expenses. GTE Financial will set a preliminary limit to the credit line, possibly giving you access to up to 90% of the value of their home depending on credit history, less any liens. You choose when and how often to borrow money. As you pay off your debt this frees up additional credit. During the term of the loan, you have a “draw” period where you can borrow as much as you want from your credit limit. The draw period is five years and you have 15 years to repay. Just like a credit card, you pay interest on the amount you borrow.

         Rates as low as 5.00% APR*** 

Loan Comparison Chart

Home Equity Loan

Advantages: Home Equity Loan

  • Interest rates are locked in over the life of the loan for most Home Equity Loans. Homeowners don’t have to worry about unexpected rises in their Annual Percentage Rate.
  • Since a Home Equity Loan is a one-time, lump sum, some homeowners may find it easier to avoid additional debt versus a HELOC where you can continuously draw down money from the loan.

Good Choice If:

  • You prefer fixed monthly payments that won’t change.
  • A longer loan term is necessary.

Disadvantages: Home Equity Loan

  • Since Home Equity Loans are usually Fixed Rate loans, if interest rates fall, the borrower will end up paying more in interest versus a HELOC which usually uses a variable rate that adjusts downward.
  • Since the life of the loan is longer, for example 15 years, you end up paying more in interest.
  • You only receive money one time, so if additional costs arise, the borrower would need to apply for a new loan or consider refinancing.

Home Equity Line of Credit

Advantages: HELOC

  • If you don’t know for sure how much money you will need over a period of time, a HELOC allows the borrower to take advances as they need. As you pay it back, it frees up more credit.

Good Choice If:

  • A lower Annual Percentage Rate is more important than the possibility of an increase in your monthly mortgage payment.
  • It is uncertain how much money you will need to borrow and when.

Disadvantages: HELOC

  • A borrower will not have the security of locked in payments. As rates change, so will the monthly payment.
  • A HELOC has a shorter loan length which will require faster payment.

*The Home Equity Loan 10-12 day closing (excluding Saturday, Sunday and Federal Holidays) is from the date of receiving a completed application. Any delays due to an incomplete application are not covered. The Home Equity Loan 10-12 day closing is based upon all required borrower supporting documents being received electronically within 5 days of complete application. In addition to the oral or written request for credit, required information and documentation from the applicant(s) includes but is not limited to: income pay stubs, W-2 statements, tax returns, any other type of verification necessary to substantiate income, asset verification, title verification and any other additional information requested. Credit is subject to approval. Adequate property value and a clear title is also needed for qualification. Appraisal must be paid for by applicant within 5 days of application. Simultaneous loan closing are not eligible for this promotion. The 10-12 Day closing does not cover delays caused by third parties delivering required documentation on behalf of the applicant(s). ** Home Equity Loan must be newly funded with a minimum amount of $25,000 in order to earn Go Points. Points can be earned on multiple Home Equity Loans as long as they are on different properties. Points should appear within 72 hours of opening the account. Go Points for a HELOC are earned with an initial minimum draw of $10,000 within the first 45 days. Any balance must be maintained for at least 90 days. A minimum balance must be maintained for at least 3 months. Points can only be earned once and will typically post the next business day after the 3 month period if requirements are met. *** For loans of $10,000 - $100,000 with First Lien Position and a 90% maximum loan to value. All rates are based on evaluation of credit history, LTV, loan amount and occupancy, so your rate may differ. Offer is subject to change or cancellation without notice. Federally insured by NCUA. Equal housing lender.

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