Improve your home
A Home Equity Loan or a Home Equity Line of Credit (HELOC) can help you get the money you need to fund home improvement projects, major purchases, or your next big dream.
Options designed to help you achieve your goals
The equity you’ve built in your home can help pay for things like home improvement projects, major purchases, or anything you might need. First Federal Bank of Kansas City offers two options that can help you get the money you need to fund your next big dream.
Home Equity Loan: A fixed rate loan designed to give you cash up front.
Home Equity Line of Credit (HELOC): A line of credit that allows you to take out cash as you need it.
Which option is right for you?
Home Equity Loan
- Funds up front: Get cash as soon as you take out the loan.
- Lower rates: Enjoy lower rates than many credit cards and personal loans
- Designed for your budget: Choose the loan term that meets your needs.
- Fixed-rate freedom: Make budgeting easy with predictable payments.
HELOC
- Quick approval: Get access to the funding you need in days.
- Great rates: Low introductory rate for the first 12 months
- Flexible funding: Take out only the amount you need, when you need it.
- Less interest: Pay interest only on the amount you borrow.
- Get the funds you need: Use up to 90% of your home's value.
More Resources
Use our Home equity calculator to see how much you could qualify to borrow. Or, read these articles to learn more about Home Equity Loans and HELOCs.
We've got your back
Thinking about starting the process to take out a loan, but want to talk to an expert first? That’s why we have a team of home loan consultants ready to answer questions and help you navigate the process.
Frequently Asked Questions
What is a home equity line of credit (HELOC)?
What is it?
A HELOC, also known as a home equity line of credit, lets you borrow against the equity you’ve built in your home through a secure credit line. The interest rates through a HELOC are often lower compared to other loans. Since HELOCs are a line of credit, you have flexibility around borrowing and repaying money. Additionally, the interest you pay may be tax deductible.
How does it work?
Essentially, a HELOC works like a credit card. Your lender sets the credit limit and you can borrow up to that amount. Payments are due monthly, but you have the flexibility to make additional payments at any time.
What is a home equity loan?
What is it?
A home equity loan lets you borrow against the equity you’ve built in your home through a lump sum of cash upfront. Simply, they are a way to turn the value you've built up in your home into cash that you can use for whatever you need. A home equity loan has a fixed interest rate, meaning your monthly payment on this loan will be the same for the entire term length. Additionally, the interest you pay may be tax deductible.
How does it work?
With a home equity loan, you get a lump sum of cash as soon as you take out the loan. The amount of cash you can take out depends on the amount of equity you have in your home. To pay back the loan, you choose the term of the loan. A home equity loan has a fixed-rate, which means you will pay consistent monthly payments throughout the loan period. The rate for your loan is based on your CLTV (combined loan-to-value) rate and loan term.
What is the difference between HELOC and home equity loan?
A HELOC and home equity loan are quite similar but the main differences come down to:
- The way funds are distributed. HELOCs funds are set at a credit limit and you have a limited period where you can withdraw funds. Home equity loans pay you out in an upfront lump sum.
- The interest rate. HELOCs are usually a variable rate as it's a revolving line of credit. Home equity loans are usually a fixed rate.
- Payment method. When it comes to HELOCs, you only pay back the amount you borrowed once funds are drawn. With a home equity loan, you're expected to make periodic payments over a set time frame.
Read this article that covers the difference between a HELOC and home equity loan in depth.
How much money can I take out?
A home equity loan uses the value of your home to determine the amount of cash you can take out. Generally, you may be able to take out a home equity loan of up to 90% of the amount you own on your home. This percentage is your CLTV (combined loan-to-value) rate. For example, if your home is valued at $300,000 and you have $100,000 remaining on your mortgage, this means you have $200,000 of equity in your home. To find how much you can borrow, start by multiplying your total home value by your CLTV rate. (300,000 x 0.9 = 270,000) Then, subtract the amount you still owe on the original mortgage for your home. ($270,000 - $100,000 = $170,000) The resulting amount is the maximum amount you can take out.
Use our Home Improvement Loan calculator to estimate the amount you can take out with a Home Equity Loan or HELOC.
What additional fees are there?
Setting up your home equity loan could incur some additional fees, similar to what you could expect when taking out a mortgage. Be sure to ask your lender what you can expect once the process is complete so you're not blindsided by anything. Below are some of the fees you may see when starting a home equity loan. Many of the terms and fees are determined by the lender. Take some time to research these fees and consult with your lender.
- Appraisal fees
- Upfront charges
- Mortgage preparation and filing
What risks come with a home equity loan?
The biggest risk you face with a home equity is if you fail to make your payment, you could lose your house because it’s being used as collateral for your loan. Banks have made strides to protect you from such losses, but the risk still remains in the event you’re unable to make payments.
Read this article that breaks down 4 questions you may want to answer when considering a home equity loan.
*All loans subject to credit approval.
