Consumer Loans: Home Equity

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Home Equity

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A Home Equity Loan or Line of Credit is a loan secured by the portion of your home's value you own outright. That's defined as the difference between your primary residence's appraised value and your current mortgage balance. Because homes generally hold or grow in value over time, HEL rates tend to be very low. They're always lower than credit cards and most consumer loans.

At Northern Hills Federal, we offer two types of Home Equity products – a Home Equity Line of Credit or HELOC, and a Home Equity Loan which is a fixed-rate installment loan with a single advance.

Use our calculator to determine your Home Equity Credit Line Amount.

  • Home Equity Line of Credit

    This loan provides a credit limit you can borrow against.  As you pay back your loan advances, the amount again becomes available to borrow. HELOCs typically have a draw period (the number of years during which you can take loan advances) and a repayment period (the maximum number of years you can take to repay any balance remaining at the end of the draw period). The ability to get advances whenever you need them is the big advantage of HELOCs. For example, if you are building an addition to your home, you can take a HELOC advance periodically to pay for expenses as they are incurred, and the same with college. You pay interest on the amounts as they are funded, not on the credit limit.

    HELOCs have variable rates that follow a published index. The Prime Rate is most often used. The Prime is the rate a bank charges its best business customers for commercial loans. The actual rate you pay will be expressed as a percentage above or below the index. For example, if the loan rate is Prime + 1% and Prime is 7%, your fully indexed rate will be 8%. As the index moves up or down, so can your rate – monthly, quarterly or annually.  Refer to your disclosure for complete details.

  • Fixed-Rate Home Equity Loan

    Also known as a Home Equity Loan or Home Equity Installment Loan, this loan gives you a one-time loan advance. The monthly payment and interest rate remain the same for the life of your loan much like an auto loan. People generally use Fixed-Rate HELs for a single major expense such as an auto purchase.