By Lori Gazillo

With good weather upon us, now is a great time to think about enhancing the value of your home with a Home Equity Loan or Line of Credit. A home is a significant investment that is building equity every day towards your financial future. The equity in your home can be used to your advantage. Fund home improvement projects by borrowing against your equity to increase the value of your home. This type of loan is not only for home improvement projects. You can also put you investment to work for other important life needs, such as a college education, a new car, or even a vacation. There are two types of equity loans, a fixed rate loan, and a line of credit.

An Equity Loan is typically used when funds are needed for a specific, one-time purpose, such as purchasing a car or a major renovation. You will receive a lump sum of money when the loan closes, and have a fixed monthly payment that you can pay off over a predetermined time period. The fixed rate of a home equity loan can be beneficial because of the ability to budget a set monthly payment that will never change throughout the life of the loan.

A Home Equity Line of Credit also has some distinct advantages. A major benefit is the ability to borrow funds up to a predetermined limit, whenever you need it, therefore cutting down on interest costs, because you are only paying for the equity you use. When you are ready to do another project you can write another check "on the house", and as you pay back the loan, the amount becomes available to borrow again. There is generally a minimum payment due each month, typically based on an adjustable rate that fluctuates according to variations in the prime rate. The way you draw and repay funds for a HELOC is similar to the way you draw and repay funds for other revolving lines of credit such as a credit card, with the option to pay off and borrow as much of the line as you want up to the limit provided.

In the case of both the Home Equity Loan and Line of Credit, you will need to file an application and follow steps similar to that of obtaining a mortgage, but a lot less complicated. At Legacy Banks, for instance, the process includes a simple application, followed by home appraisal. You will then receive notification of whether or not the loan or line was approved and for what amount. Approval is determined by a variety of factors including credit. The appraisal determines the amount for which you will be approved, and as home values have decreased it may be less than you think. Following approval, a closing is then scheduled with an attorney. At Legacy Banks, customers pay no closing costs for Home Equity Loans or Lines as they are covered by the bank.

The type of loan you choose is based upon you current life situation, and what you plan to do with the funds in the future. Contact a Legacy Banks consumer lending specialist at 1-800-292-6634 and they would be happy to discuss what options will best fit your individual needs.

Lori Gazzillo is Vice President of Marketing and Public Relations at Legacy Banks and may be reached via email at Lori.Gazzillo@LegacyBanks.com.