Home Equity
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Ready to Explore Your Home Equity Options?If you’ve built equity in your home and are considering using it for a major expense, Fidelity Bank can help you compare your options.
Access the Equity You’ve Built in Your Home
If you’ve built equity in your home, you may be able to use it to finance a major expense, home improvement, debt consolidation or another significant financial need.
Fidelity Bank offers home equity financing for homeowners throughout Northeastern Pennsylvania and the Lehigh Valley. Depending on your needs, you can choose between a Home Equity Installment Loan (HEIL), which provides a lump sum with a fixed rate and predictable payments, and a Home Equity Line of Credit (HELOC), which provides flexible access to funds as you need them.
Our local bankers can help you understand the differences and determine which option fits your borrowing needs.
What Is Home Equity?
Home equity is the portion of your home that you own after accounting for the balance of your mortgage and other loans secured by the property.
A simple way to estimate your home equity is:
“Home Equity = Current Home Value − Outstanding Mortgage Balance”
For example, if your home is worth $350,000 and your remaining mortgage balance is $220,000, you have approximately $130,000 in equity before considering other liens or loans secured by the property.
Your available borrowing amount may be different from your total home equity. Fidelity Bank considers factors such as your property’s value, existing mortgage balance, credit history, income, debts and applicable lending requirements.
How Can You Use Home Equity?
Home equity financing can provide funds for a variety of significant expenses.
Home Improvements
Finance renovations, repairs, remodeling projects or other improvements to your home.
Debt Consolidation
Use home equity financing to consolidate certain higher-interest debts, subject to qualification and the terms of the new loan.
Education
Use available equity to help fund tuition or other education expenses.
Major Purchases
Home equity financing may provide funds for significant purchases or other qualified expenses.
Other Financial Needs
Depending on the product and your qualifications, you may be able to use home equity financing for other purposes.
Because these loans are secured by your home, it’s important to consider the interest rate, fees, repayment period, monthly payment and total cost before borrowing.
Home Equity Financing Options
Fidelity Bank offers two primary ways to access the equity in your home:
Home Equity Installment Loan (HEIL)
A Home Equity Installment Loan provides a lump sum upfront with a fixed interest rate and predictable monthly payments.
A HEIL may be appropriate when you know how much you need to borrow for a defined expense, such as a major home renovation, debt consolidation or education expense.
A HEIL offers:
* A lump-sum loan
* A fixed interest rate
* Predictable monthly payments
* A defined repayment term
* Funds available upfront for a specific financial need
Learn more about Home Equity Installment Loan (HEIL).
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Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by your home’s equity.
Instead of receiving the entire amount upfront, you can draw funds as needed, subject to your approved credit limit and the terms of the line.
A HELOC can be useful when expenses occur over time, such as a renovation with multiple stages or costs that may change during a project.
Fidelity Bank’s HELOC has a variable interest rate. Eligible borrowers can also use Fidelity’s Rate Lock feature to fix the rate on some or all of the amount borrowed.
Learn more about Home Equity Line of Credit (HELOC)
HEIL vs. HELOC
Both options allow you to borrow against your home’s equity, but they work differently.
| Feature | HEIL | HELOC |
|---|---|---|
| Funds | Lump Sum | Draw as needed |
| Interest rate | Fixed | Variable |
| Payment structure | Predictable scheduled payments | Varies based on balance and applicable rate |
| Best suited for | Defined borrowing needs | Expenses that occur over time |
| Access to funds | Entire loan disbursed upfront | Funds available up to approved credit limit |
| Credit replenishes as you repay | No | Yes, subject to the terms of the line |
The best structure depends on your project or financial need, how much you need to borrow, when you need the money and how you prefer to repay it.
Learn more about HEIL vs. HELOC
How Much Home Equity Can I Borrow?
Having equity in your home does not mean you can borrow the entire amount.
Your available borrowing amount may depend on:
- Your home’s current value
- Your outstanding mortgage balance
- Other liens secured by the property
- Loan-to-value requirements
- Credit history
- Income
- Existing debts
- The type of financing you choose
- The amount you request
An appraisal may be required to determine the current value of your property.
Fidelity Bank generally requires less than an 80% loan-to-value ratio for its HELOC, which corresponds to at least 20% home equity, although individual eligibility and requirements can vary.
How to Calculate Your Home Equity
You can estimate your current equity in three steps:
- Estimate your home’s current value. Use a reliable estimate or valuation of your property.
- Check your remaining mortgage balance. Look at your most recent mortgage statement.
- Subtract your mortgage balance from your home’s value.
For example:
Home value:$400,000
Mortgage balance: $244,000
Estimated equity: $156,000
This represents approximately 39% equity in the example.
Your lender will determine the property’s value and your final borrowing eligibility as part of the application process.
Home Equity for Home Improvements
Home improvements are one of the most common reasons homeowners consider using their home equity.
You might use home equity financing for:
- Kitchen remodeling
- Bathroom remodeling
- A new roof
- HVAC replacement
- Major repairs
- Accessibility improvements
- Additions
- Other significant renovation projects
Before borrowing, determine the expected project cost and compare financing options.
A Home Equity Installment Loan may make sense when you know the amount you need upfront.
A HELOC may provide more flexibility when expenses occur over time or the final project cost is uncertain.
Remember that a renovation does not guarantee an increase in home value equal to the amount you spend. Consider both the financial cost of the project and the benefits it provides while you own the home.
Home Equity for Debt Consolidation
Some homeowners use home equity financing to consolidate higher-interest debt.
A home equity loan or HELOC may have a different interest rate and repayment structure than the debts being consolidated. Before proceeding, compare:
- Interest rates
- Fees
- Monthly payments
- Repayment periods
- Total interest
- Total cost of borrowing
Debt consolidation does not eliminate the debt. It changes how the debt is financed.
Because home equity financing is secured by your home, understand the risks before using your home as collateral for debt consolidation.
Home Equity vs. Cash-Out Refinance
A cash-out refinance is another way to access home equity, but it works differently from a home equity loan or HELOC.
With a cash-out refinance, you replace your existing mortgage with a new mortgage for a larger amount. The difference between the new mortgage balance and the amount needed to pay off the existing mortgage is provided as cash, subject to the loan terms and approval.
A home equity loan or HELOC generally allows you to access equity without replacing your existing first mortgage.
When comparing these options, consider:
- Your current mortgage rate
- The new mortgage rate
- The amount you need
- Closing costs
- Your existing mortgage balance
- The resulting monthly payment
- The total cost over the life of the loan
Learn more about HELOC vs. Cash-Out Refinance.
What Should I Consider Before Borrowing Against My Home?
Before applying for home equity financing, consider:
How much do I actually need?
Start with the expense rather than the maximum amount you may be able to borrow.
When will I need the money?
A defined, one-time expense may call for a different structure than expenses that occur over several months or years.
What payment can I afford?
Consider the new monthly payment alongside your existing mortgage and other financial obligations.
Do I prefer a fixed or variable rate?
A fixed-rate installment loan provides predictable payments. A HELOC generally has a variable rate, although Fidelity’s HELOC includes a Rate Lock option for eligible borrowed amounts.
How will borrowing affect my long-term finances?
Consider the total interest, fees, repayment period and the fact that your home secures the borrowing.
Home Equity Rates
Home equity rates can vary based on the product, loan term, credit history and other factors.
Review current Home Equity rates and contact Fidelity Bank to discuss the product, rate and terms that may apply to your situation.
Note: Current published Home Equity Loan rates are subject to change and the rate offered to an individual borrower may differ based on factors including credit history, product, loan term and remaining equity.
Why Work With Fidelity Bank?
Fidelity Bank’s home equity lending teams serve homeowners throughout NEPA and the Lehigh Valley. You can speak with a local banker about your available equity, product options, documentation, rates, terms and application process.
The goal is to help you understand your options before you borrow.
Need help?
For more information or questions, please call us at 1-800-388-4380 or email us at Fidelity@fddbank.com.
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