June 01, 2025

How a Home Equity Works and Get to Know Our HELOC

By Laura Jones

Mortgage

They say owning a home is the American dream. Not only does it signify independence, but it can also show financial security. After paying a mortgage for a few years, you begin to own a piece of your home and can access the cash you’ve accumulated to pursue other financial goals. The portion of your home that you own is known as home equity¹. Equity can be a powerful financial tool that you can use to pay off debt, renovate your home or make other financially savvy decisions. Learn how home equity works, how to calculate your home equity and how you can use it to accomplish your goals.

How Home Equity Works:

Your equity is the difference between the market value of the property and the outstanding balance of the mortgage. (i.e.: My home’s value is $300,000 and I owe $125,000 on my mortgage, so I have $175,000 in equity in my home).

Your equity can increase in two ways:

Property value appreciation through market conditions or improvements to the home.
Decreasing the outstanding balance of the loan.

Home Equity Loan vs Home Equity Line of Credit (HELOC):

You can borrow against the equity you have in your home in one of two ways, both of which you can use for a variety ways:

Home Equity Loan: A home equity loan is a second mortgage where homeowners borrow against their equity. The home equity loan is distributed as one lump sum at a fixed rate with fixed monthly payments.
Home Equity Line of Credit (HELOC). A home equity line of credit is also a second mortgage that allows homeowners to borrow money against the equity in their home. As a line of credit, you can draw on the available line multiple times up to maximum credit limit and it has a variable rate that can change over time.

CommunityAmerica’s Hybrid Home Equity combines the flexibility of a home equity line of credit (HELOC) with the control of a home equity loan. That means: with our Hybrid Home Equity you can draw on your master line of credit anytime, at which point you can lock in a fixed rate on any portion of the balance for a set, easy-to-manage monthly payment.

Other perks of CommunityAmerica’s Hybrid Home Equity include:

The Ability to borrow up to 100% of the value of your home to use however you’d like.
Conveniently transfer money anytime, anywhere via Online Banking or our Mobile App.
The ability to borrow from your home equity line for up to ten years, so it’s ready for you whenever you need it over the course of an entire decade.
Possibly qualify for or grow your share of Profit Payout*.

How You Can Use a HELOC:

When it comes to using our Hybrid Home Equity, the possibilities are nearly endless. That's why we like to call it the "anything" loan. Here are common uses to get you started:

Home Improvements – Use the equity in your home to increase its value. Tackle your renovation projects such as remodeling the kitchen, putting in a pool or replacing the AC unit. Enjoy the home you’re already in and ensure your home will be up to date if it ever comes time to sell.

Debt Consolidation – A HELOC can be a great option for consolidating high interest debt². Combine your other debt to enjoy the ease of having one low monthly payment. Doing so could help you get out of debt faster and may save you money on interest over the life of the loan.

Education – Whether you’re looking to pay for your child’s college or wanting to get your own degree, a home equity line of credit is a great way to finance education.

Everything Else – Use your home equity to cover just about any large expense, from medical bills and dental work to adoption fees. You could also use it to build your emergency fund or take a European vacation.

You can estimate how much equity you may be able to borrow from your home by using our handy online home equity calculator. If you have any questions about our Hybrid Home Equity, give us a call at 800.892.7957 or stop by one of our convenient branch locations.

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About the Author

Laura Jones

Regional Branch Market Director

Laura Jones is a Regional Branch Market Director and has been with CommunityAmerica helping members achieve their financial goals since 2003. She has a passion for helping others achieve financial stability by encouraging smart money management decisions and setting financial goals.

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1 Hybrid Home Equity. APR = Annual Percentage Rate. Introductory rate for the line of credit as low as 2.99% for the first year, then the APR will vary for the remaining life of the loan. As of 05/31/2022, this variable HELOC APR would have been 3.99% APR for 80% LTV. LTV = Loan to Value. For the HELOC, the Rate is subject to a minimum of 3.99%, and the maximum APR is 18%. Line of credit has a 10-year draw period with a maximum of 15-year repayment period. Minimum payment for master line of credit is calculated at the time a credit advance is made using a payoff period of 180 monthly payments or $150.00 minimum payment, whichever is greater. Rates are based on the Prime Rate published in the Wall Street Journal Money Rates Table plus margin. Home value may be determined by an appraisal or valuation with a cost to the member. Property must be a single-family home and owner-occupied. Property insurance will be required. Line amounts range from $10,000 to $250,000 based on LTV. Offer not available to members who have an existing Home Equity Loan or HELOC with us. Limited time offers subject to credit approval. Offers subject to change or may expire without notice. Promotion available for a limited time only. Rate Lock Feature: rate can be locked up to three times at once per Hybrid Home Equity loan. Portion of credit line can be fixed up to 10 years from Line of Credit loan date. Minimum fixed loan amount for a Rate Lock is $5,000. Fixed rate portion reduces the availability on the line of credit, payments made to the fixed rate portion replenishes the line of credit. As of 05/31/2022, the fixed rate for an 80% Hybrid Locked segment is as low as 4.99%. Home Equity products are available in Arkansas, Nebraska, Florida, Illinois, Kansas and Missouri only*. For states with a mortgage tax, the cost of the mortgage tax will be paid by the member and may be paid in cash or taken from the proceeds of the HELOC. *Arkansas, Nebraska, Florida, Illinois properties - maximum LTV 90%/maximum loan amount $250,000..

2 Benefits of a loan for debt consolidation depend on individual circumstances. Contact us to speak with a representative on whether it is the right fit for you.

How a Home Equity Works and Get to Know Our HELOC

How Home Equity Works:

Home Equity Loan vs Home Equity Line of Credit (HELOC):

Other perks of CommunityAmerica’s Hybrid Home Equity include:

How You Can Use a HELOC:

About the Author

Laura Jones

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