Is a HELOC Right for You?

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A Home Equity Loan is a type of loan in which the borrower uses the equity of their home as collateral. Equity is the difference between the current market value of the home and the outstanding mortgage balance. Here are some key points about Home Equity Loans:

There are two different types of Home Equity Loans. The first is an open-ended line of credit commonly referred to as a HELOC and the second is a fixed rate fixed term loan.

Mission City FCU offers fixed rate term equity loans for terms of either 10 or 15 years for up to $500,000 depending on your available equity. A fixed equity loan provides you the full amount of the loan at funding and is repaid at a set monthly payment over the life of the loan. Your rate will not change during the term of the loan. Interest rates on Home Equity Loans are generally lower than unsecured borrowing rates as these loans are secured by the equity in your home.


Mission City FCU also offers HELOC loans which are Home Equity Lines of Credit. A HELOC loan offers the flexibility of allowing you to determine when and how much you advance. These loans offer a 10-year draw period followed by a 15-year repayment period. The borrower only pays interest on the outstanding loan balance during the 10-year draw period, or more if they chose. HELOC loans have variable loan rates so it’s important that the borrower understand how the variable rate works and how it is determined. Just as there is risk for the rate to go up it may also go lower over the life of the loan. Once established your Mission City FCU HELOC can easily be accessed through your Mission City FCU checking account.

Whichever loan type you chose you are able to spend the proceeds however you see fit. Pay for home improvements, debt consolidation, education expenses, major purchases or emergency expenses.

It’s important to remember that because your home is used as collateral, failing to repay the loan can result in foreclosure. Always consider your financial situation and ability to repay before taking out a Home Equity Loan.

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