4 Big Reasons to Choose a Credit Union for the Best Home Equity Loan
You worked hard to save for a down payment, built up your credit score, and shopped around for a great mortgage rate. The house you’ve always wanted is yours! You’ve been diligently paying down your mortgage each month and thus have a fair amount of equity in your home. But, you dream of adding a large back deck with room for your grill and some patio furniture, but you don’t have the extra money to build one. So, you decide to take advantage of that equity you’ve been building and apply for a home equity loan.
Situations like these and many others happen to homeowners throughout Lancaster County all the time. Home equity loans are a fantastic funding solution to give you the money for home improvement projects or other goals, such as debt consolidation.
But finding the right lender for your loan is important to you. You want the best home equity loan you can find at the lowest rate. Choosing a credit union like Lanco FCU can give you the personalized service, low-interest rates, and fewer fees you want.
What Is a Home Equity Loan?
Also known as a second mortgage, home equity loans are a type of loan that homeowners can get based on the amount of equity available in their home. The equity is the difference between the market value of your home and your current mortgage balance. You can generally apply for a home equity loan equal to 80% of your loan-to-value ratio.*
After applying and receiving approval on the best home equity loan for you, you’ll receive a lump sum of money in about four weeks. Home equity loans have a fixed rate of interest, so your payments will be the same throughout the life of the loan. Then, you’ll make monthly payments to pay back the borrowed amount, plus interest.
Another lending option that uses the equity in your home is a home equity line of credit or HELOC. These differ because they provide a revolving credit line for homeowners with variable interest rates, which means the payment differs each month. If you’re unsure which option is better for you, contact us!
What Can I Use a Home Equity Loan For?
Home equity loans are flexible borrowing options that can be used for various purposes. Some examples include:
- Paying for college tuition
- Consolidating debt
- Paying off credit cards with higher interest rates
- Home improvement or renovation projects
- Upgrade appliances
- Replace higher-interest personal loans with a fixed-rate loan
Why Should I Choose a Credit Union vs. a Bank for a Home Equity Loan?
Finding the best home equity loan is important to you. After all, you’re using your house as collateral to secure the loan, so you want to ensure you’re getting the lowest interest rate possible from a reputable lender. That’s why choosing a credit union instead of a bank is wise. Let’s look at four reasons why.
1. Ease of Application
When dealing with something as important as a home equity loan, having a financial partner who works in your best interest is essential. When you choose a credit union to find the best home equity loans, you’ll receive a friendly person there waiting to help you and guide you through the loan process. You can easily apply for a home equity loan online if you wish, but you may also visit any of our branches. We make it simple to get the funds you need and are available to answer any questions you may have about the process.
2. Lower Interest Rates
Whether you choose a home equity loan or line of credit, you can enjoy lower interest rates at a credit union than you typically receive at a bank. Since other home equity loan lenders must answer to shareholders, they typically have higher interest rates to appease them. But since our members are the owners, we help them by providing lending products at lower rates. Check out this chart below to determine your estimated annual percentage rate (APR)1.
Find your credit score in the list of ranges below and decide on how long you’d like the loan term to be. The box where the two intersect reflects our current home equity loan rate. Closing costs apply and may affect the APR.
| Credit Score | APR1 | |||
| Term… | 3-Years | 5-Years | 10-Years | 15-Years |
| 750+ | 4.24% | 4.49% | 4.99% | 5.74% |
| 700-749 | 5.24% | 5.49% | 5.99% | 6.74% |
| 660-699 | 6.24% | 6.49% | 6.99% | 7.74% |
| 620-659 | 7.24% | 7.49% | 7.99% | 8.74% |
| Under 620 | 8.24% | 8.49% | 8.99% | 9.74% |
APR accurate as of 11/3/2022 and may change at any time. Click here to view current rates.
3. Fewer Fees
When you wish to take a home equity loan or line of credit from a credit union, you’ll experience fewer fees than if you were going to a bank or mortgage provider. For example, there is no application fee to apply for the loan, but closing costs apply and affect the APR. Please speak with a lender for details.
4. Profits Stay in THE Community
When banks make a profit, the money goes to their shareholders, who are typically Wall Street institutions. But when a credit union makes a profit, it’s returned to its members through lower interest rates on lending products, higher dividends on savings products, and fewer fees. By providing these benefits to our members, the excess profits made by Lanco FCU are returned to our community right here in Lancaster, PA.
For the Best Home Equity Loans in Lancaster, PA, Choose Us!
Finding the best home equity loan is easy when you choose a credit union like Lanco Federal Credit Union! We return our excess profits to our members in the form of lower interest rates, so when you need a loan, you’ll enjoy lower interest rates. Our current home equity loan rates depend on your credit score and the loan length but range from 4.24% to 9.74%.1 Get started today requesting the loan amount you need by visiting one of our branches or applying online!
*LTV is the loan-to-value ratio. The option to borrow up to 90% LTV may be available for borrowers with a credit score of 700 or higher. To calculate your available equity, multiply your home’s value by the LTV percent, then subtract your current mortgage balance. For example: Value of Home [ $200,000 ] x 80% LTV [ 0.80 ] = [ $160,000 ] [ $160,000 ] – Current Mortgage Balance [ $100,000 ] = Available Equity [ $60,000 ]
¹Annual Percentage Rate (APR) accurate as of 11/3/2022 and may change at any time. Closing costs exist and may affect APR. Rates advertised for financing up to 80% loan to value (LTV). Financing up to 90% LTV may be available for borrowers with a credit score of 700 or higher, with 2.00% added to the approved interest rate. Payment example: A fixed home equity loan of $25,000 for 10 years at 4.99% APR will require 120 monthly payments of $265.04. Fixed home equity loan rates advertised are for 2nd lien home equity loans; 1st lien home equity rates may be lower. Call Lanco FCU at (717) 569-7180 for a rate quote.