HOME EQUITY LOANS: LOW-COST, TAX-ADVANTAGED CREDIT

If a large amount of debt is eating up your disposable income each month, or if you need cash to remodel your kitchen--or to buy a new car--a home equity loan might be your best bet.

With a home equity loan, you borrow a lump sum of money repayable over a fixed term, usually 5 to 15 years, giving you the security of a locked-in rate and a consistent monthly payment. Plus, there's also a tax advantage. Unlike almost any other consumer loan type, the interest on a home equity loan is likely to be tax-deductible ($50,000 if married filing separately).

People tend to use home equity loans for large, one-time expenses like a major home-improvement project. You also might use one to start a business, make a big-ticket purchase, or consolidate high-interest credit card debt. This type of loan makes sense if you don't foresee future borrowing needs.

Since home equity loans use your home as collateral, your home could be at risk if you do not make your payments. However, if you don't take on excessive debt and you do make timely payments, you can't beat the low interest rates and tax-deductible interest of a home equity loan.

Reach out to a Cy-Fair FCU loan officer to see if a home equity loan may work for you.