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Mortgage or HELOC? What's the difference?

You deserve your dream home! and RVCU is totally here to help you get it.


As we welcome spring, we’ll likely start seeing peak activity in the housing market. Are you interested in taking out a mortgage and buying your dream home? Or do you already own your home, but want to take on some spring improvement projects? If so, a HELOC is a great finance option.

We have tips for both!

For this, we welcome spring, we turn to RVCU's Mortgage Originator Rhonda Graves (because she's the expert!) for her advice.

Q: Springtime is always an exciting time for the housing market! How do you get ahead? Why is it so important to be preapproved before you start the home buying process?

This market is a tough one already. Low inventory goes fast, so as more homes go on the market and if you’re not preapproved for a mortgage, you won’t have buying power. With how competitive the market is right now, a realtor might not even bother to move forward with you.

Q: What's your best advice for a new home buyer?

  1. Set a budget
  2. Get pre-approved
  3. Don't rush and purchase the first thing you see, but you need ot be ready so when you do find something you want, you can act fast. 
  4. Always use an experienced real estate agent. I can't stress that enough. 

Q: What are things you should NOT do while going through the homebuying process?

You should NOT run your credit constantly, open any new debt, or switch jobs without speaking to your lender. Also, don’t close any credit cards – this can significantly drop your credit score. Remember, a preapproval is a hard inquiry on your credit score, so you will lose some points but it’s a very important step in the home buying process. If you do everything right – you’ll recover.

Q: What are things you SHOULD do while going through the homebuying process?

Keep up on your credit. Make sure you’re always paying your bills on time, keep your debt at a minimum, set a home buying budget you can afford and stick to it, and keep in close contact with your lender and realtor. Be patient.

Q: What can RVCU help with to make the homebuying experience less scary for new homeowners?

We walk with you through the entire process, help you build your credit if you’re not quite ready for a loan, and take those steps with you to get you in your first home. At Rock Valley Credit Union, we have team members certified in credit building, including myself, to help you get there. By partnering with RVCU, you will have an entire team by your side to help build credit and answer questions.

A major misconception is the mortgage process is difficult, but it’s only as difficult as you and the lender make it. Ensure your lender is always communicating with you, and then make sure you have all of your documents ready. Be organized and be prepared with your documents. RVCU will help make it easier for you.

Q: The idea of buying a home right now is too much. I own a home – are there good options to help me pay for a home improvement project?

A HELOC - or one equity line of credit – is a really good option to consider. Another option is a fixed home equity loan, which is a lump sum of money. Both can be used to pay for anything – from paying down debt to renovating your home.

I see a lot of people taking advantage of the HELOC option because the rate of a fixed rate home equity loan is driven by the market. Plus, with a HELOC you can keep drawing from the line of credit as you pay off more on your home. With a HELOC, there is flexibility on payment options. For example, you can update your home over the course of five years as you draw on interest-only payments or there is a 10-year repayment plan option as well.

I’ve noticed in this market that a lot of home equities are being used. People are realizing the market is so competitive and they can make their current home more beautiful, be happy in it, and do it all at a good rate.

Thanks, Rhonda, for all the great advice!

At Rock Valley Credit Union, we want to help you get in that dream home, whether that be through a new home purchase or upgrading your current home.

If you’re dipping your toes in the market or trying your first DIY project, Rock Valley Credit Union is here to help! We can answer your questions, listen to your list of pros and cons, and guide you through the home buying or home renovation process so you’re never alone. Call us at 815-282-0300 or learn more HERE.