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Whether you want to renovate your kitchen or bathroom, pay for that dream wedding or consolidate your debt, the right kind of home equity lending product can help you reach your goals. This is because home equity loans come in many shapes and sizes that you can tailor to your needs.

The major upside of homeownership is your monthly payments help you build equity. Home equity is the value of how much of your property you actually own and is often a homeowner’s most valuable asset. If you need to borrow money against this asset, companies such as banks and credit unions will lend you money using your equity as collateral.

Traditional Home Equity Loan:

This type of home equity loan is paid in installments, just like your primary mortgage. Typically, you can borrow a fixed amount of money and obtain the funds in one lump sum. Traditional home equity loans usually have a fixed interest rate, loan term and monthly payment amount.

Home Equity Line of Credit (HELOC):

This type of home equity loan works a lot like a credit card. You can draw what you need against your equity during a set period of time, and you only pay interest on money you’ve actually borrowed. As you pay back the funds that you have borrowed, you make that equity available to use again in the future. If your HELOC is an interest-only loan, then you pay interest only during the draw period. Once the draw period has ended (usually 5, 7 or 10 years), the loan may be converted into a traditional amortized loan, or it may require one full balloon payment of the debt.

Cash-Out Refinance Loan:

This type of home equity loan allows you to borrow a fixed sum of money against the equity in your home by refinancing your existing mortgage into a new larger loan. This is because a cash-out refinance combines the borrowed amount with the principal of your existing mortgage. Unlike a traditional home equity loan, you keep only one lien against your property. As you make your payments, you pay the increased debt over the duration of your refinanced term. Now that you know your potential home equity loan options, you need to decide which home equity loan to choose.

How much home equity do you have?

Your equity is the amount of ownership you have in your home. It is the appraised value of your home, minus the amount you still owe on your mortgage. By making improvements to your home, it can increase your home’s appraised value - thus increasing your home equity.

Community Bank has a number of home equity loans that are tailor-made for every situation. Whether you are looking to lock in a rate or you wish to have the flexibility to write your own loan using the equity in your home, Community Bank has the solution you are looking for.

For more than 118 years, Community Bank has been personally involved in our community. Business owners, nonprofit groups, government agencies, school administrators and individual personal account holders aren’t just our customers; they’re our friends and neighbors. By taking the time to get to know you, your neighbors at Community Bank are better able to serve your needs. If you are interested in our home equity program or learning more about Community Bank, visit communitybank.tv or call 888-223-8099.

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