Home Equity: How Does It Work?
March 24, 2025
By understanding home equity and using it wisely, you can unlock financial opportunities while ensuring your long-term financial stability.
HOME EQUITY LINE OF CREDIT
Home Equity
HOME EQUITY LINE OF CREDIT
Flexible funding for your next big project.
Looking for a smarter way to borrow? Tap into the equity in your home for lower rates than what most credit cards or personal loans offer. Whether you choose a structured loan or an open line of credit, you can access the funds you need for renovations, to consolidate debt, or to handle life’s milestones.
Big Plans? Use Your Equity to Make Them Happen
A Home Equity Loan or Home Equity Line of Credit (HELOC) lets you tap into the equity in your home to fund a home renovation or life event, consolidate debt, or pay for a large expense. Whether you’re planning a kitchen upgrade, celebrating a dream wedding, or taking a family vacation, using the equity in your home makes it easy to get the funds you need at an affordable rate.
Home Equity Loans
Receive a lump sum upfront and enjoy predictable monthly payments. With lower rates than most personal loans or credit cards, a home equity loan is an affordable way to get the funds you need.
Home Equity Loans
Receive a lump sum upfront and enjoy predictable monthly payments. With lower rates than most personal loans or credit cards, a home equity loan is an affordable way to get the funds you need.
Home Equity Lines of Credit (HELOCs)
A HELOC is ideal for an ongoing project. Enjoy flexible access to funds when you need them, and you have the option of making interest-only payments during the draw period.1
Home Equity Lines of Credit (HELOCs)
A HELOC is ideal for an ongoing project. Enjoy flexible access to funds when you need them, and you have the option of making interest-only payments during the draw period.1
From remodels to unexpected expenses, your home can help
Competitive Rates
Save more with low Home Equity Loan and HELOC rates.
Flexible Terms
Choose what works best for your monthly payment and long-term plans.
Closing Costs Credit
Columbia CU will cover up to the first $4002 in closing costs.
Home Equity Loans vs. HELOC
Not sure which home equity option is best for your needs? Use the chart below to compare the key features of Home Equity Loans and HELOCs side by side:
| Home Equity Loan | HELOC | |
|---|---|---|
| Best for | One-time expenses | Ongoing expenses |
| Payments | Fixed monthly payments | Interest-only payments during the draw period |
| Collateral | Your home | Your home |
| Fixed or Adjustable Interest rate | Fixed | Adjustable |
| How you receive the funds | Lump sum upfront | As needed during the draw period |
| How you can use the funds | No restrictions | No restrictions |
| How much you can borrow | Up to 100% of home’s equity | Up to 100% of home’s equity |
| Annual fees | No annual fee | No annual fee for first year; then $50/year |
| GET STARTED WITH A HOME EQUITY LOAN | GET STARTED WITH A HELOC |
FIXED HOME EQUITY
70% or less LTV
Rate as low as: 6.99% APR³
71-80% LTV
Rate as low as 7.24% APR
Greater than 80% LTV
Rate as low as 8.49% APR
HOME EQUITY LINE OF CREDIT (HELOC)
6-Month Introductory APR4
APR: 5.24%
Non-introductory APR (70% or less CLTV)
APR: 8.25%
Non-introductory APR (71%-80% CLTV)
APR: 8.25% – 9.50%
Non-introductory APR (81% or more CLTV)
APR: 8.75% – 9.50%
FIXED HOME EQUITY
70% or less LTV
Rate as low as: 6.99% APR³
71-80% LTV
Rate as low as 7.24% APR
Greater than 80% LTV
Rate as low as 8.49% APR
HOME EQUITY LINE OF CREDIT (HELOC)
6-Month Introductory APR4
APR: 5.24%
Non-introductory APR (70% or less CLTV)
APR: 8.25%
Non-introductory APR (71%-80% CLTV)
APR: 8.25% – 9.50%
Non-introductory APR (81% or more CLTV)
APR: 8.75% – 9.50%
HOME EQUITY LOAN
Put your home’s value to work.
A Home Equity Loan allows you to get a lump sum from a second mortgage for many different needs.
- Lump-Sum Funding: Receive the entire loan amount up front. Ideal for large, one-time expenses.
- Fixed Interest Rates: Lock in a rate for the life of the loan and enjoy stable, predictable monthly payments.
- Set Repayment Terms: Terms of up to 15 years help you get payments that work for your budget.
- No Annual Fees: There are no ongoing fees after the closing.
Ready to tackle that big project or pay for a large expense? Click below to apply for a Home Equity Loan today to get the funding you need at a great rate!
HOME EQUITY LOAN
Put your home’s value to work.
A Home Equity Loan allows you to get a lump sum from a second mortgage for many different needs.
- Lump-Sum Funding: Receive the entire loan amount up front. Ideal for large, one-time expenses.
- Fixed Interest Rates: Lock in a rate for the life of the loan and enjoy stable, predictable monthly payments.
- Set Repayment Terms: Terms of up to 15 years help you get payments that work for your budget.
- No Annual Fees: There are no ongoing fees after the closing.
Ready to tackle that big project or pay for a large expense? Click below to apply for a Home Equity Loan today to get the funding you need at a great rate!
HOME EQUITY LINE OF CREDIT (HELOC)
Borrow what you need, when you need it.
Borrow against the equity in your home as often as needed during the draw period. Repay the borrowed money with fixed monthly payments after the draw period ends.
- Revolving Line of Credit: Borrow up to 100% of your home’s equity as often as needed during the draw period. Repay it, and then borrow again.
- Make Interest-Only Payments: Pay interest only on what you borrow during the draw period, which keeps payments lower early on.
- Flexible Borrowing: Ideal for ongoing or unexpected expenses — like home repairs, debt consolidation, or emergencies.
- Low Rates: HELOCs typically have lower rates than other financing options, like credit cards or personal loans.
Ready to remodel your kitchen at your own pace? Apply for a HELOC today to access flexible funding with low rates and the freedom to borrow when needed.
HOME EQUITY LINE OF CREDIT (HELOC)
Borrow what you need, when you need it.
Borrow against the equity in your home as often as needed during the draw period. Repay the borrowed money with fixed monthly payments after the draw period ends.
- Revolving Line of Credit: Borrow up to 100% of your home’s equity as often as needed during the draw period. Repay it, and then borrow again.
- Make Interest-Only Payments: Pay interest only on what you borrow during the draw period, which keeps payments lower early on.
- Flexible Borrowing: Ideal for ongoing or unexpected expenses — like home repairs, debt consolidation, or emergencies.
- Low Rates: HELOCs typically have lower rates than other financing options, like credit cards or personal loans.
Ready to remodel your kitchen at your own pace? Apply for a HELOC today to access flexible funding with low rates and the freedom to borrow when needed.
How to apply for a HELOC or Home Equity Loan.
- Apply Online: Click the link below or stop by a branch to start the process.
- Submit the Application: It only takes a few minutes to complete our short application.
- We’ll Contact You: We’ll review your application and reach out to you with a loan decision.
How to apply for a HELOC or Home Equity Loan.
- Apply Online: Click the link below or stop by a branch to start the process.
- Submit the Application: It only takes a few minutes to complete our short application.
- We’ll Contact You: We’ll review your application and reach out to you with a loan decision.
Home Equity Options FAQs
Yes, getting a credit union HELOC is a smart choice because credit unions are not-for-profit financial institutions. That means you’re more likely to get a better interest rate, more flexible terms, and personalized service.
Getting approved for a HELOC isn’t hard, but you do have to meet certain requirements. Your credit history and score, income, debt-to-income ratio, and how much equity you have in your home will be reviewed. If you have a solid financial profile and sufficient equity in your home, you have a good chance of getting approved.
The monthly payments on a $50,000 Home Equity Loan will depend on the Home Equity Loan rates and repayment period (loan term). For example, with a 10-year term at a 9% annual percentage rate (APR), your monthly payment would be about $633. If you extend the loan to 15 years, it would lower your payments to $507 a month. Your actual payment will vary based on your credit score and lender terms.
To qualify for a home equity loan, you’ll typically need to have sufficient equity built up in your home, a solid credit score, a manageable debt-to-income ratio, and a stable source of income. These factors help lenders assess your ability to repay the loan. If you’re unsure where you stand, our team is here to help you understand your options and work toward meeting the requirements. Contact us to learn more.
A Home Equity Loan allows you to borrow a lump sum at a fixed rate, which may be ideal for large, one-time expenses, like a roof replacement. A HELOC allows you to borrow funds as needed, which is ideal for renovations that are completed in phases. Both home improvement loan options can be obtained through a credit union.
There are no restrictions on how you can use the funds from a HELOC or Home Equity Loan. You can use them for home improvement projects, unexpected bills, debt consolidation, or even a dream vacation.
Yes, you can pay off your credit union Home Equity Loan early or make extra payments to save on interest without penalty.
Columbia Credit Union membership is open to individuals and businesses in Washington State and in the Oregon communities of Clackamas, Marion, Multnomah, and Washington Counties (and to families of eligible individuals).
From Our Blog
What Are Home Equity Lines of Credit and Loans?
April 11, 2023
Interested in remodeling your outdated kitchen? A home equity line or loan can help make it happen. Learn about HELOCs and more.
Need more financing options?
Personal Loans
Fund your dream vacation, cover unexpected repairs, or consolidate debt with our personal loans. With competitive rates and flexible terms, your financial goals are within reach!
Credit Cards
Experience a winning combination of competitive rates, generous rewards, and worldwide travel perks. And, no balance transfer fees and 0% APR for 12 months.
Small Business Loans
Access up to $250,000 for equipment, a company vehicle, or expansion. And, we offer owner-occupied real estate purchases or refinances up to $1 million.
¹Minimum Payment Requirements: You can obtain advances of credit for 10 year(s) (the “draw period”). The total draw period will in no case exceed 10 years. At the time your draw period ends (either due to a negative credit review or at the end of the 10 year maximum period), you will no longer be able to obtain credit advances and must repay the outstanding principal balance (the “repayment period”). The length of the repayment period is 15 year(s). During the draw and repayment periods, payments will be due monthly. Your minimum monthly payment will equal 1.0% of the principal balance outstanding or $75.00,
whichever is greater. Balances of less than $75.00 must be paid in full.
²Typical closing costs range from $50-$1,050. Of that amount, Columbia Credit Union will cover up to $400 in the form of a lender credit (lender credit does not apply to full appraisal costs, if full appraisal is required. Appraisal fees are to be paid upfront by the member in the event the full appraisal becomes necessary).
³APR=Annual Percentage Rate. Equity Loan APR is fixed for the selected term and is determined by the amount requested, Credit Score, and LTV (Loan-to-Value). Membership is required to borrow, and subject to application and credit approval.
4APR=Annual Percentage Rate. Introductory APR is fixed for the first six (6) months of your newly opened Home Equity Line of Credit (HELOC). Introductory APR is available only on primary residences. Introductory APR is fixed and based on the Wall Street Journal Prime Rate minus a margin of 2.26% and has a minimum 1.99% APR. After the six-month introductory period, the minimum lifetime APR is 4.00% and the maximum lifetime APR is 15.00%. Non-introductory APRs are variable and are based on the Wall Street Journal Prime Rate plus a margin ranging from 0.75%-2.00% depending on your creditworthiness and combined loan-tovalue (CLTV). The APR can change quarterly on the 1st of January, April, July, and October based on the Wall Street Journal Prime Rate. No annual fee the first year, thereafter $50. Typical closing costs range from $50-$1,050. Of that amount, Columbia Credit Union will cover up to $400 in the form of a lender credit (lender credit does not apply to full appraisal costs, if full appraisal is required. Appraisal fees are to be paid upfront by the member in the event the full appraisal becomes necessary). Columbia CU HELOCs are subject to application and credit approval. Please consult your tax advisor regarding tax deductibility of interest and charges. Homeowner’s insurance is required. Membership is required to borrow.