The Federal Reserve has been hiking up interest rates over the past few years to combat inflation. This has affected many types of loans, including personal loans and home equity line of credit rates in Delaware. Below you’ll find the differences, similarities, pros, and cons of both options to determine which solution makes the most financial sense for you.

Personal loans and HELOCs are both term loans—meaning you repay them over a set term with fixed monthly payments. However, these loans differ in terms of qualifications, term length, interest rate, and more. DEXSTA offers competitive personal loans and home equity lines of credit in Delaware, so you can meet your homeownership goals however you need.

What Is a Home Equity Line of Credit (HELOC)?

A home equity line of credit is a revolving line of credit, which means you can draw from it as often as needed, somewhat like a credit card. With a HELOC, you borrow against your home’s equity, which is the difference between the home’s value and the amount owed on the mortgage. HELOC rates in Delaware change based on market conditions and have a specified borrowing period, typically 10 years.

Pros of DEXSTA Home Equity Line of Credit (HELOC)

• High lines
• Flexible
• Withdraw money as you need it via a Visa Platinum credit card
• 10 years to access funds and 15 years to pay back
• Interest payments may be tax-deductible if you use the money for home improvements
• Have money for unexpected expenses

Cons

• Uses home as collateral (risk losing the home if you can’t afford payments)
• May require closing costs and fees
• Variable interest rates

Learn more about DEXSTA’s Home Equity Line of Credits here. 

What Are Personal Loans?

Personal loans are unsecured loans, which means they are not backed by collateral like a home or car, with fixed interest rates and repayment terms. Personal loans can be used for any purpose the borrower chooses, like debt consolidation, home improvements, or paying for a wedding. Because they are not tied to the value of an asset, personal loan rates are not subject to the same fluctuation as HELOC rates in Delaware. 

At DEXSTA Federal Credit Union, all personal loans are simple interest with no prepayment penalties. Once you apply, you can have money in your account the same day. 

Pros of DEXSTA Personal Loans

• Loan amounts from $500 to $50,000
• No fees
• Flexible terms 12 to 72 months
• Get money the same day
• Unsecured loan (more flexibility)
• No collateral

Cons

• Need a good or excellent credit score to qualify
• Additional monthly payment
• Higher payments
• No tax advantage
• Can affect credit scores negatively

Learn more about DEXSTA’s Personal Loans here. 

Home Equity Loan Rates in Delaware vs. Personal Loans—Which Is Right For You?

In the current economy, inflation and interest rates are skyrocketing across the nation, especially in Delaware and Maryland. Here are some tips to guide you in choosing the best loan for your situation.

HELOCs are a better option when interest rates are low, you have built up a large amount of equity in your home, and have an ongoing project that will require several draws.  

Personal loans are a better alternative to a HELOC when you don’t want to put your home at risk, want a fixed interest rate, or need the money fast.

Analyzing HELOC Rates in Delaware

If you’re shopping for personal loan rates or a home equity line of credit in Delaware, it’s important to do your research and determine which one is best for you. DEXSTA, your local credit union, is a great first stop when you’re considering both options. Credit unions are well-known for offering low rates and helping you tailor your loan to your needs to keep it affordable. Stop by one of our branches to discuss your options today!