Frequently Asked Questions
What is the difference between a Home Equity Loan and a HELOC at On Tap Credit Union?
A Home Equity Loan gives you a fixed lump-sum payment upfront and has fixed payments over a set term. A HELOC (Home Equity Line of Credit) acts like a credit line secured by your home’s equity. You can draw as needed, repay, and draw again up to your limit. With On Tap, a HELOC offers flexibility, while a Home Equity Loan provides predictability for defined expenses.
What can I use home equity funds for?
You can use funds from a home equity loan or HELOC for many purposes such as home renovations, debt consolidation, education, large expenses, or unexpected costs. Many homeowners tap their equity to simplify bills or fund big life projects.
How much equity can I borrow against my home?
On Tap may allow you to borrow up to roughly 90% of your home’s appraised value minus existing mortgage(s), subject to creditworthiness and loan-to-value (LTV) guidelines. The exact amount depends on your specific home, outstanding mortgage(s), and income/credit profile.
What are the interest rates and terms for On Tap home equity products?
Home Equity Loans come with fixed-rate terms; HELOCs have variable rates that fluctuate with market conditions. Because terms vary, On Tap also lists a maximum APR cap for reference, though actual rates depend on creditworthiness and loan details. Closing and appraisal costs may also apply.
What documents and requirements do I need to apply for a Home Equity Loan or HELOC?
You’ll need proof of income, homeowners insurance (with a declaration page), your current mortgage information, and possibly a home appraisal or automated valuation. Closing costs and appraisal fees vary depending on loan size and property; the credit union will provide full disclosure during the application.
Is the interest on a home equity loan or HELOC tax-deductible?
Potentially, yes. If the funds are used to buy, build, or substantially improve the home securing the loan, the interest may be tax-deductible. It’s always best to consult a tax professional or financial advisor for details related to your situation.
What are the risks of using a HELOC versus a fixed Home Equity Loan?
HELOCs use variable interest rates, so monthly payments can rise if rates increase. Also, drawing funds without paying down principal, especially during draw periods, can lead to higher long-term debt, particularly once repayment begins.
How do I choose between a Home Equity Loan and HELOC?
Pick a Home Equity Loan if you want a predictable payment schedule and know the total amount you need (for example, for a remodel or debt consolidation). Choose a HELOC if you need flexibility for ongoing project costs, irregular expenses, or emergency access to cash. Your financial discipline, goals, and comfort with interest-rate fluctuation should guide your decision.
What costs and fees should I expect when applying for home equity borrowing?
There may be appraisal costs, closing costs (which can vary depending on loan size), and insurance or title-insurance fees. Actual costs depend on the property and loan details and will be provided to you as part of the application process. We encourage reviewing full disclosure of costs before signing any agreement.
Do I need to be a member of On Tap Credit Union to apply?
Yes, membership in On Tap Credit Union is required to finalize home equity loans or HELOCs. If you’re not already a member, we will help set up your membership account as part of the application process. As a member, you will also have access to all other credit union services as well.
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