How to Choose the Right Loan for Your Needs
educating-myself | Read Time: 3 minutes
By Candice Caruso | Published: October 2023
As interest rates continue to rise, many consumers are homing in on their borrowing habits to avoid overextending themselves.
Borrowing can play an important role in achieving your financial goals, so while it is important to manage your credit carefully – particularly while interest rates are elevated – finding the right lending option for your needs can help you make home improvements, pay for a wedding or car and much more.
Here are some borrowing options to consider for your needs.
Personal loans can offer lower rates than credit cards for many borrowers and are set for a fixed amount of money paid off over a pre-determined amount of time at a fixed interest rate.
Personal loans can be used for a variety of reasons such as making a large purchase, remodeling your home, consolidating debt and more. These loans are unsecured, so the borrower does not need collateral to get the loan, which can make them a good fit for consumers who may rent an apartment or may not have enough equity built up in their house just yet.
Home Equity Lines of Credit
Home Equity Lines of Credit (HELOCs) provide a revolving credit line, similar to credit cards but typically with a lower interest rate, which you can draw funds from for up to 10 years with up to 20 years to repay the loan. These funds are borrowed against your equity in your home and can be a good option for homeowners looking to remodel after they’ve built up their equity.
Another option when it comes to a HELOC is the ability to convert your HELOC to a fixed-rate loan for the total loan amount or a portion of the loan. Locking in a fixed rate for your HELOC can help save money if the fixed rate offered is lower than the variable rate you’re currently paying, and you’ll be making payments toward the interest and principal of the loan rather than making interest-only payments if you don’t lock your rate.
Terms and conditions for when you can convert your HELOC to a fixed rate, how often you can lock in a fixed rate and any fees associated with doing so can vary by lender, so it is important to talk to your local banker to discuss your options and what works best for you.
Home Equity Loans
Home equity loans allow you to choose from terms up to 20 years and provide predictable, fixed payments and terms over the agreed upon repayment period.
These loans can be a great option for homeowners who have built up their equity and are looking to complete one or more home improvements over a short period of time. You’ll receive the amount you’re borrowing as a lump sum and then have a fixed interest rate and loan term to avoid any surprises.
There are a variety of options for your borrowing needs and no one-size-fits-all solution. Scheduling an appointment with your local banker can be a great way to evaluate your options and choose the one that will help you achieve your financial goals.
About the Author – Candice Caruso
Candice Caruso is Senior Vice President, Chief Consumer Lending Officer at WSFS Bank. She brings more than 20 years of experience in the financial services industry, including 12 years as a business funding expert, and has been featured on Bloomberg Radio, CNBC’s Closing Bell, The Wall Street Journal and Franchising World.
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