Home Improvement: Loan or Line of Credit?

Written by Ashley King of Arvest Bank 

Spring is here, and the warmer, sunnier seasons mean different things to different people. Some prefer a trip to the ballpark, and some prefer a trip to the beach. Some prefer the lake, and some prefer lazing in the shade.

Another popular — if perhaps less exciting — spring and summertime activity involves home improvement projects. And whether your home improvement project is designed to increase the appeal and value of your home so you can sell it, or maybe make it more livable and enjoyable for you and your family, home equity loans and lines of credit can be helpful tools. 

It is important to remember, however, that there are some important differences between a home equity loan and a home equity line of credit.

Home equity loans may be a good product for those who are looking to receive a lump sum of cash to address their needs. The rate for this type of loan is usually fixed, and the consumer repays principal and interest each month as a fixed payment.

A home equity line of credit, meanwhile, is a good product for those who prefer to have access to a revolving line of cash over an extended period of time. With a home equity line of credit, the customer does not pay interest until some or all of the cash is actually withdrawn, and the monthly payment then fluctuates with the market. The funds can be disbursed and used as needed.

With both of these products, of course, your home is the collateral that’s at stake for the loan or line of credit. That’s why you will want to explore all options carefully.

Additionally, before deciding between a home equity loan and a home equity line of credit, customers should shop for credit terms that best fit their needs without causing them financial struggles. They also should keep in mind that failure to make the required payments could result in negative information being disclosed to the credit reporting agencies, not to mention the potential loss of their home.

It can also be helpful to talk to a banking professional you know and trust. Despite the fact that technology has made a wealth of information readily available, many people still find it beneficial to tap into the expertise a local lender can offer.

So whether your goal is to add a deck or a porch or a pool to your home to boost its resale value, to add bedrooms for additional children, or simply update the interior or exterior of your home to give it a more modern look, consider a home equity loan or an equity line of credit. You may find that the solution to your unique, specific need is easier to achieve than you think.

Ashley King is a consumer lending sales manager for Arvest Bank. She can be contacted at aking@arvest.com.


Ashley King, Consumer Lending Sales Manager
Arvest Bank

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