Financial Matters: Paying for projects

HAMPTON, Va. (WVBT) - It is Home Makeover Week and Jeff McGlohn from BayPort Credit Union came on the show to talk about ways to pay for all of your big plans.

Home Equity Loans & HELOCS

 Closed End vs Open End

• A Closed End Home Equity Loan would be the product if you know exactly what the cost will be to accomplish your goal. For example a new heating and air conditioning unit, new car or college tuition. Closed end loans have different terms to meet your individual needs such as a fixed term, or a balloon. Interest is usually tax deductible.
• Open End, better known as a Home Equity Line of Credit, or HELOC, would be a great product if your goal is home improvements, room additions, or adding outdoor living spaces and a pool. Here you can use the equity in your home as a line of credit. With a HELOC, you use what you need, when you need it. Payments are based on what you have used off your equity line. Once again interest is usually tax deductible.

LTV (Loan to Value) Limits

• With any Home Equity product you must stay within the "Loan to Value" limits. The equity you have in your home is determined by the difference between the value of your home and the amount owed on it. A city or county tax assessment can be used to determine your equity. If this amount isn't enough to accomplish your goal, you may need to get an appraisal done on your property. Appraisals are generally higher than assessments.
• If your first mortgage is not with BayPort Credit Union, and your loan request is $100,000 or more, an appraisal is required regardless of your LTV.

For more information, stop by any BayPort Branch for help or visit them on the web at bayportcu.org !