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Home Equity and More

October 29, 2021

TVFCU Mortgage Originator, Tina Peters, shares her expertise about home equity loan rates and other topics when it comes to home ownership.


Q: Why is using equity in your home a good idea for some people?

A: Home equity is the portion of your home that you’ve paid off. It’s the difference between what the home is worth and how much is still owed on your mortgage. A lot of people use the equity in their home to make needed repairs, debt consolidation or to purchase more real estate. Depending on what the borrower needs the equity for, I may recommend a cash out refinance, a home equity line of credit which can be either a first or second mortgage or a fixed rate second mortgage.

Q: How much equity is there?

A: Your home equity value is the difference between the current market value of your home and the total sum of debts registered against it. On a traditional conventional cash-out refinance loan, you are usually limited to 80% loan to value.

Q: What is a cash-out refinance?

A:  A cash-out refinancing pays off your old mortgage in exchange for a new mortgage, ideally at a lower interest rate but higher loan amount than what is currently owed. On TVFCU Portfolio products we can potentially go up to 90% loan to value on a cash-out refinance. The amount of equity you can pull out will depend on not only available equity but also on the borrowers credit score.

Q: Is there more flexibility with a home equity line of credit?

A: Yes, you are only required to pay interest on accrued for the first 10 years on a home equity line of credit. Since it is a revolving line of credit it works similarly to a credit card. The only problem, your interest could go up quite a bit before you pay off what you owe because the interest rate is adjustable.

Q: What is a fixed rate home loan?

A:  A fixed rate home loan means that the rate is fixed for the entire term of the loan and would not change.  If you are planning to sell your home in the near future you may be able to find a lower rate on an adjustable rate product.

Q: With a HELOC explain closing costs?

A: The average closing costs if a HELOC or fixed rate second mortgage can sum up to 3% to 5% of your loan amount. This usually is not as expensive as primary mortgages because there is no origination fee.  Closing costs are usually rolled into the loan so that there is no out of pocket costs to the borrower.


View our TVFCU Mortgage Products 101 video from our TVFCU Virtual Mortgage Seminar series to learn more.

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