Flex Smarter - with a No Closing Costs Home Equity Loan
WHAT IS A HOME EQUITY LOAN AND HOW CAN IT WORK FOR YOU?
Owning a home doesn’t just provide stability, it can also offer a powerful source of financial flexibility. A home equity loan allows you to borrow against the value you've built up in your home, often at a lower interest rate than personal loans or credit cards. With GHS Federal Credit Union, many members are discovering that a home equity loan can be a smart way to fund renovations, consolidate debt, or cover major life expenses.
Let’s break down how a home equity loan works, the most common ways members use their equity, and how this type of borrowing compares to other options when it comes to affordability and long-term financial wellness.
HOW DOES A HOME EQUITY LOAN WORK?
A home equity loan is a type of installment loan that lets you borrow a lump sum of money using the equity in your home as collateral. Equity is the difference between what your home is worth and what you still owe on your mortgage. According to the Consumer Financial Protection Bureau (CFPB), these loans are typically paid back over a fixed term with a set interest rate, which makes them predictable and easier to budget for.
GHS FCU also offers home equity lines of credit (HELOCs), which work like a credit card, allowing you to draw from the line of credit as needed during the draw period. This can be a great option for ongoing expenses like phased renovations or medical bills.
COMMON USES FOR HOME EQUITY LOANS
Many members use home equity loans for renovations—from remodeling a kitchen to building a backyard deck or replacing outdated windows. Because home improvements often increase your property’s value, this type of borrowing can actually pay off twice: first in livability, and later in resale value.
Debt consolidation is another popular use. If you’re carrying high-interest credit card debt, you may be able to pay it off all at once with a home equity loan and replace it with a single, lower-interest monthly payment. This can reduce financial stress and help you pay off debt faster.
Other members use equity to cover life expenses such as college tuition, weddings, travel, or even launching a small business. According to Rocket Mortgage, the key is that home equity loans typically offer lower interest rates than unsecured borrowing options, making them a cost-effective solution for large expenses.
WHAT ARE THE BENEFITS OF USING HOME EQUITY?
There are several reasons why borrowing against your home’s equity can be a smart financial move. First, interest rates on home equity loans are generally much lower than those on credit cards or personal loans, especially when you're working with a local lender like GHS that prioritizes member value.
Second, the interest may be tax-deductible if the funds are used to “buy, build, or substantially improve” your home, per the IRS. Be sure to consult your tax advisor to understand your eligibility.
And finally, when you borrow from a trusted credit union like GHS, you're not just accessing your home’s equity—you’re gaining a partner who understands your financial goals and provides transparent, fee-friendly lending. For example, GHS offers home equity loans with no closing costs for a limited time, which can save you up to $1,000 upfront.
IS A HOME EQUITY LOAN RIGHT FOR YOU?
Like any loan, home equity borrowing isn’t one-size-fits-all. You’ll need to have sufficient equity in your home, a stable income, and a clear plan for how you’ll use and repay the funds. It’s also important to understand the difference between home equity loans and HELOCs, so you can choose the product that aligns with your needs.
At GHS Federal Credit Union, we’re here to help you make informed financial decisions. Our team can walk you through your options, help calculate your potential loan amount, and even connect you with free financial counseling if you’re unsure where to start.
To learn more about how home equity loans work—and whether they’re right for you—visit our Home Equity Loan Page or talk to a lending specialist today.