Tag Archives: HELOC

Using Your Home’s Equity for Renovations: 5 Smart Ways to Fund Your Next Project

Your home is one of your biggest investments, and over time, you’ve probably thought about making some updates — maybe a kitchen remodel, a new roof, or adding a cozy outdoor space. But home improvements can be expensive, and not everyone has the extra cash lying around. That’s where home equity loans and HELOCs (home equity lines of credit) come in.

If you’ve built up equity in your home, you might be able to use it to fund renovations and increase your home’s value. Let’s break down how it works, the best projects to invest in, and whether tapping into your home equity is the right move for you.

What Is Home Equity and How Can You Use It?

Home equity is the difference between what your home is worth and what you still owe on your mortgage. As you pay down your loan and property values rise, your equity grows, giving you a valuable financial resource.

There are two popular ways homeowners use equity to finance home improvements:

  1. Home Equity Loan – A home equity loan works like a traditional loan, giving you a lump sum upfront with predictable monthly payments. Best for one-time projects with a set cost.
  2. HELOC (Home Equity Line of Credit) – A HELOC works more like a credit card, allowing you to borrow money as needed up to a certain limit. Best for ongoing or phased projects where costs might fluctuate.

Both options typically offer lower interest rates compared to personal loans or credit cards, making them a smart choice for financing renovations.

Best Home Improvement Projects to Increase Your Home’s Value

Not all home improvements are created equal. If you’re going to borrow money, it’s smart to invest in projects that boost your home’s value and make life more comfortable. Here are some of the best upgrades to consider:

  • Kitchen Remodels – Even minor updates like new countertops, cabinets, and energy-efficient appliances can add value and modernize your space.
  • Bathroom Upgrades – A refreshed bathroom with updated fixtures, new tile, or even an extra half-bath can be a game changer.
  • Curb Appeal Enhancements – Fresh landscaping, a new front door, or even repainting the exterior can make a big difference when it comes to home value.
  • Energy-Efficient Improvements – Replacing old windows, upgrading insulation, or adding solar panels can save money on utilities and attract future buyers.
  • Adding Living Space – Whether it’s finishing your basement, adding a deck, or building a home office, extra space means extra value.

If you plan to sell in the near future, prioritize projects that increase resale value. If you’re staying long-term, focus on renovations that enhance your lifestyle.

Is Using Home Equity for Home Improvements a Good Idea?

While borrowing against your home’s equity can be a smart financial move, it’s important to make sure it’s the right choice for your situation. Here are some things to consider:

  • Do you have enough equity? Most lenders require homeowners to have at least 15-20% equity before borrowing against it.
  • Can you afford the payments? Even with lower interest rates, make sure your budget can handle the monthly repayment.
  • Will the renovation add value? If the project will improve your home’s value and quality of life, it’s often worth the investment.
  • Do you plan to stay in your home? If you’re selling soon, focus on improvements with a high return on investment.

How to Get Started

If you’re thinking about using your home’s equity to finance renovations, here’s how to begin:

  1. Determine Your Equity – Check how much equity you have in your home to see if borrowing is an option.
  2. Explore Loan Options – Compare home equity loans and HELOCs to find the best fit for your needs.
  3. Set a Budget – Have a clear idea of your renovation costs before applying for a loan.
  4. Talk to a Lending Expert – The team at Peoples Bank & Trust can walk you through the process and help you choose the right financing option. Contact us today for any questions you may have.

Turn Your House into Your Dream Home

Your home is more than just a place to live — it’s an investment in your future. If you’re ready to tackle those long-awaited upgrades, a home equity loan or HELOC could be the key to making it happen.

At Peoples Bank & Trust, we’re here to help you make the most of your home’s value with financing options that fit your needs. Visit us today or give us a call to learn more about how you can turn your home equity into home improvements!

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Peoples Bank & Trust Co.
Member FDIC, Equal Housing Lender
NMLS #407724

Couple looking at paint swatches together

Winter Home Maintenance Tips for a Cozy, Worry-Free, and Energy-Efficient Season

As temperatures drop and the first official day of winter approaches, it’s essential to prepare and maintain your home to ensure a safe and energy-efficient season. At Peoples Bank & Trust, we understand the importance of protecting your home and saving on energy costs. Here are some winter home maintenance tips to help you do just that.

Prepare Your Home’s Exterior

Before the harsh winter weather sets in, make sure to:

  1. Clean and inspect your gutters and downspouts to ensure proper water flow. Clogged gutters can lead to ice dams, causing water damage to your home.
  2. Trim tree branches and shrubs to prevent damage from snow and ice.
  3. Seal any gaps or cracks in your home’s exterior, including windows and doors.
  4. Install storm windows or replace old windows with energy-efficient ones.
  5. Test your sump pump to ensure it works correctly. A functioning sump pump can prevent basement flooding during winter thaws.

Insulate and Seal Your Home’s Interior

To keep the warm air in and the cold air out, make sure to:

  1. Insulate your attic, walls, and floors to prevent heat loss.
  2. Seal any gaps or cracks around windows, doors, and electrical outlets.
  3. Install weatherstripping around doors and windows to prevent air leaks.
  4. Use area rugs and curtains to add an extra layer of insulation.
  5. Insulate exposed pipes in unheated areas such as basements and garages to prevent them from freezing and bursting.
  6. Use a programmable thermostat to adjust the temperature when you’re not home.

Maintain Your Heating System

To ensure your heating system is running efficiently and safely, make sure to:

  1. Have your heating system serviced by a professional before the winter season, especially if you are a new homeowner.
  2. Change your furnace filter regularly to improve air quality and efficiency.
  3. Consider upgrading to a high-efficiency furnace or heat pump.

Conserve Energy and Lower Your Bills

To keep your energy bills low, make sure to:

  1. Adjust your thermostat to use less energy when you’re not home or sleeping.
  2. Use energy-efficient light bulbs and appliances.
  3. Unplug electronics and appliances when not in use to avoid standby power consumption.
  4. Consider installing solar panels or a programmable thermostat.
  5. Keep curtains and blinds open during the day to let in natural sunlight.

Consider a Home Equity Line of Credit (HELOC)

If you’re looking to make energy-efficient upgrades to your home, consider using a Home Equity Line of Credit (HELOC) from Peoples Bank & Trust. A HELOC allows you to tap into the equity in your home and use the funds to make improvements that can increase your property value and save you money on energy costs. Check out more details here! By following these winter home maintenance tips, you’ll be able to enjoy a cozy and worry-free winter while also protecting your home and saving on energy costs. And, if you’re looking to make energy-efficient upgrades, consider using a HELOC from Peoples Bank & Trust.

Home Equity Loan vs. Home Equity Line of Credit

Home Equity Loan vs. Home Equity Line of Credit 

A Home Equity Loan and Home Equity Line of Credit are both loans that use your home as collateral. Though they are very similar, they are different loans. Keep reading to learn what a Home Equity Loan and Home Equity Line of Credit are, their differences, and their benefits!

What Are They?

A Home Equity Loan and Home Equity Line of Credit, commonly known as a HELOC, are both loans which use your home as collateral. Both are fantastic options for borrowing money if you’ve paid down a significant portion of your mortgage. 

Home Equity Line of Credit: A HELOC is a line of credit in which the lender will agree to lend a maximum amount within an agreed-upon period and variable interest rate. Essentially, a HELOC uses a percentage of your home’s equity to provide a revolving line of credit, much like a credit card. Your monthly payments with a home equity line of credit will change over time. With a HELOC, disbursement of funds is made on an as-needed basis and repayment is interest-only during the draw period; you repay all the principal and any remaining interest afterward. 

Home Equity Loan: A home equity loan is very similar; however, a home equity loan is a lump sum that is disbursed upfront and paid back in fixed installments. Your monthly payments will be the same each month. With a home equity loan, disbursement of funds is an upfront lump sum and repayment starts as soon as the loan is disbursed. 

The Main Difference

HELOC: A home equity line of credit’s interest rate may vary and therefore your monthly payments on a home equity line of credit may change over time. With a HELOC, disbursement of funds is made as you need them, and repayment is interest-only during the draw period; you repay the principal and any remaining interest afterward.

Home Equity Loan: With a home equity loan your interest rate is fixed and therefore your monthly payments will be the same each month. With a home equity loan, disbursement of funds is an upfront lump sum and repayment starts as soon as the loan is disbursed. 

Pros and Cons

Home Equity Line of Credit (HELOC) 

Pros:

  • You only borrow as much money as you need
  • Flexible repayment
  • Tax deduction
  • May come with little to no fees

Cons:

  • Variable interest rates (changes based on market fluctuation)
  • Not a set repayment plan (can be a pro for some)
  • Maybe more debt to repay as it is a long-term credit option
  • Could lose your home if you default on the HELOC

Home Equity Loan

Pros:

  • Fixed interest rate
  • You borrow a lump sum to use for nearly anything
  • Little to no fees
  • Tax deductible
  • Set repayment plan (could be a con for some)

Cons:

  • Best terms go to those with a good credit score
  • Need a lot of home equity 
  • If property values decline, you owe more than your home is worth
  • Could lose your home if you default on the loan

As you can see, a home equity loan and home equity line of credit are fantastic options for homeowners. Now that you know the benefits and main differences, which is best for you? These loans are a great source of value to access cash for renovations, large purchases, home remodel projects, college tuition, a new vehicle, or nearly any other need. Visit our website to learn more or stop in to talk with a lender!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407724