Rediscover the value and opportunity in your home’s equity

Spotlight on Finance

  • What is the annual percentage rate?
  • Is the rate variable or fixed? More often than not, home equity loans are fixed over a pre-determined period of time, which is great for budgeting. The money borrowed is dispersed in one lump sum.
  • What are the applicable fees (potentially including an application fee and a property appraisal fee)?
  • What are the closing costs?
  • Are there penalties for prepayment?

— More important, can you afford the loan…not just the minimum payments? Home equity loans are often preferable to withdrawing funds from an IRA or liquidating other assets because these withdrawals sometimes entail penalties or even capital gains consequences. But you still want to make sure a home equity loan is the right product for you. Your lender should be able to help you answer these questions. In fact, your lender should work to earn your trust by fighting to secure the best terms and loan option available to you given your unique needs and qualifications.

As for the approval process, the usual qualifiers for borrowing will apply. Lenders will look at assets, income, credit history and current financial obligations. But in the current financial climate, where low interest rates prevail and home prices are stabilizing, lenders are lending and home equity borrowing can be a very useful tool for value-enhancing home improvements, important family priorities and/or business financing.

Anthony Lanzillo is senior vice president of KeyBank and heads the Capital Region’s Retail Banking team. He can be reached at either 518-257-8598 or anthony_lanzillo@keybank.com.

Features and benefits of the home equity loan

the past couple of years, refinancing has been all the rage. Rates have been at historic lows, and most homeowners have been more interested in reducing their monthly payment or shortening their mortgage term than they’ve been in leveraging the equity in their home to finance improvements or other needs. However, with housing prices stabilizing, consumer confidence growing and people beginning to build more equity in their homes, homeowners are rediscovering the advantages of home equity loans—particularly homeowners who want to and can afford to pay off their loans in a reasonable amount.

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