AmeriCU: Comparing benefits of the Installment Loan and the Line of Credit

Home Equity Information Center

Debt Consolidation – The majority of borrowers use a home equity loan for this purpose. Creating one payment to take care of all your credit card debt. Doing this can reduce your monthly interest charges, allowing you to save or invest that much more. Making monthly payments more manageable may improve your credit rating also.
Home Improvements – Making upgrades or repairs to a house have many benefits such as making the home safer or more comfortable to live in. Improvements can also increase the fair market value of the home. Kitchen improvements raise the value the most, returning 94 percent of your investment, followed closely by additional bathrooms, family rooms and second-story additions. If you are making just a small improvement you may want to select another option such as a credit card or personal loan.
Education – A loan used for college or technical school tuition can pay for itself several times over if it lands you or a family member a better job. Many borrowers are turning to a home equity because they haven’t saved enough money to pay the expenses and their incomes are too high to qualify for grants or government-backed loans.
Big-Ticket purchases, medical expenses or emergencies – Possible tax advantages and lower interest rates make home equity loans a smart way to finance a new car, motorcycle or other high price purchases. Also an equity loan may be beneficial if faced with costly medical bills or other unplanned events.
Pay off a current mortgage or other loans – to refinance at a better rate can save hundreds, sometimes thousands of dollars over the life of the loan. These are just some of the many reasons why you may find a home equity loan fits your needs.

*Home Equity Installment Loan (fixed rate)*
Feature	Benefit
Low interest rate	Save money with competitively low rates
Fixed interest rate for life of loan	The security that the payment will always stay the same for the life of the loan
Terms up to 15 years to repay	Longer amortization makes lower payments economical
Lump sum of money up-front	Convenience of getting all the money after closing
Low closing costs	Member will save money by paying $0 or as little as 399.00 to close the loan.
Short processing time	Obtain funds quickly (usually two weeks) - convenient!
Life & Disability insurance available	Protect your financial situation in case of a sickness or injury. Protect your family in case of death. Loan will be paid off and will not tap into the your main life insurance policy.
Possible tax advantages	Home equity loans may have tax advantages. We always advise members to consult a tax advisor or accountant to be certain of tax advantages. This may save money compared to other financing options.

*Home Equity Line of Credit (variable rate) rate)*
Features	Benefit
Low interest rate	Save money with competitively low rates (low introductory rate also)
Variable rate	Convenience of a revolving line of credit, use the money whenever you need it
Interest only payments for the first five years	Economical. Lowers the monthly payment to make for easier financing. You will only pay interest on the funds (line) you've used.
Access period of 10 years, 15 years to repay	Convenient: You do not have to re-apply. You can draw on the line for up to 10 years, then have an additional 15 years to repay.
Low closing cost	Save money by paying $0 closing costs...or as little as $399.00 (in some cases) to close the loan.
Short processing time	Gain access to funds in usually two weeks; very convenient!
Rate cap of 15%	Feel secure in knowing that the rate is guaranteed to never go higher than 15% (many credit card rates can be much higher)
Money any time you need it	Access your funds (line of credit) by writing a check, using online web transfers or calling Telelink to make transfers to your checking account.
Life & Disability insurance available	Protect your financial situation in case of a sickness or injury. Protect your family in case of death. Loan will be paid off and will not tap into the your main life insurance policy.
Possible Tax advantages	Home equity loans may have tax advantages. We always advise the member to consult a tax advisor or accountant. Tax savings will save money compared to other loans.

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