If you’re planning to do home renovations, paying for education, making a large purchase, or even consolidating debt, then you may want to consider borrowing against the equity in your home. Hawaii State FCU offers two great financing options that utilize the equity in your home: a Home Equity Line of Credit (HELOC), and a HELOC Fixed-Rate Option (FROP). Depending on your financing needs, a HELOC or a HELOC FROP may be the better option for you.
Home Equity Line of Credit (HELOC)
Similar to a credit card, a HELOC is a line of credit that is secured by your home’s equity. With a HELOC, you can draw the funds when you need it. Interest rates are often variable, and you pay interest only on the amount borrowed. A HELOC may be a good option if you need flexible access to funds or when dealing with unknown or unpredictable expenses. For example, if you’re thinking about renovating your kitchen, but don’t know how much it may cost and haven’t decided on a start date, a HELOC may grant you the flexibility you need.
HELOC Fixed-Rate Option (FROP)
A HELOC FROP, in comparison, is like a traditional loan, with a fixed interest rate and fixed monthly payments – making it an attractive option for anyone who is concerned about varying interest rates. Unlike a HELOC, there is a one-time draw of funds. This may make a HELOC FROP ideal for larger expenses or situations where the funds needed are already known or predictable. Consider that kitchen scenario again: Now you’ve done your research, and know that your renovations will cost $15,000 and construction will begin in two months. In this example, it may make sense to finance with a HELOC FROP.
If you already have a HELOC, a HELOC FROP can also be used to lock all or a portion of your line of credit balance at a competitive fixed rate with fixed monthly payments.
To learn more about which product might be best for you, visit any branch or schedule an appointment to talk to a representative who help you review your options. To view our current rates, click here.
