Stay or Go? – Home Equity vs Mortgage

Home for Sale? You need a change of pace in your living situation: home equity vs. mortgage.

Flashy new homes decked out with the latest design trends. You’re spotting them as you cruise through your city. You’re seeing them while idly scrolling Zillow. And they are definitely making an appearance on your favorite HGTV shows. It’s easy to feel like you’re missing out when you see a slick new construction. Could a home renovation revitalize the space you’re living in now…or are you ready to step into a new dream home? The change you’re craving may not be out of reach with the right loan. But, which type of home loan is right for you: home equity vs. mortgage? Or, in the immortal words of The Clash, “Should I stay or should I go?”

A home equity loan can make renovation of your current digs a reality. But what if drywall and drilling isn’t the right fit for you? In that case, maybe a mortgage on a new property could get you into the perfect home. Let’s break down a few factors:



A home equity loan allows you to borrow against the investment you’ve already made by using your home as collateral. With a fixed-rate home equity loan, you’ll know what you can borrow and what your repayment will look like. A variety of factors determine the total amount you can borrow and the interest rate you’re offered. These include the value of your home, your income, credit score, current equity, and more. Your personal financial health has the most impact on whether or not a home equity loan is a suitable choice. A strong credit score and stable employment can help offset the overall interest cost of getting a home equity loan when rates are higher.

When it comes to home equioty loans there are a few perks to consider. Even when rates are climbing, home equity loan rates tend to be lower than other forms of borrowing, such as personal loans. Additionally, a home equity loan doesn’t require you to refinance your current mortgage. If you’ve got an attractively low rate on your mortgage currently, you probably don’t want to give that up. A home equity loan will allow you to keep your mortgage balance at that low rate and only borrow any new funds at today’s market rates. Finally, although closing costs can be a factor in a home equity loan, they are often waived, which can make this a cheaper option as well.

Want to understand the specifics of home equity loans even better? We did a deep dive describing how home equity works in a previous blog post.


Even if you’re in a good position to get approved for a home equity loan, that’s just the first step. Doing a DIY renovation can be rewarding, but it takes planning, prep, hard work, and a willingness to accept that things can (and often do) go wrong! It’s common to start your project and discover one or more additional issues you need to tackle.

Experts typically recommend having a clear budget before seeking out your home equity loan.  It’s also a good idea to expect costs to come out a bit higher than that initial budget. Renovation experts frequently recommend an extra 10% to account for any costly surprises. While you won’t necessarily want your loan for the maximum amount available, a little extra gives you peace of mind. If you don’t need the spare funds, you can always pay the remainder back sooner.

If you’re set on renovation but DIY isn’t your dream, you’ll want to shop around. Get quotes from several contractors before you contact our lending experts. As with DIY work, expect that surprises and delays may adjust your overall costs and timeline. While the initial quote is a starting point, it may not be the total price of the renovation.


If you know that renovation is the route for you and you’re shouting, “I Want My Home Equity,” now is a great time to apply! Between May 1 and June 30, 2024, we’re offering special promotional rates as low as 5.99% APR*. If you’ve settled on the home equity vs. mortgage decision, get started on a home equity loan today. You can apply online, or call or text us at 216.621.4644, send a live chat on, or message us through the FFCCU app. Our friendly, knowledgeable teammates will work with you on your application to help you form a plan that rocks!




Maybe you don’t have an eye for interior design, or maybe you need new horizons. No matter what, there are a few factors to consider before seeking a mortgage.

If you’re wrestling with the home equity vs mortgage loan debate, then you’re probably already in a home, which puts you at an advantage! Selling your current home gives you funds to contribute towards new digs. Even if you’re looking to step into someplace more expensive, it could be a good base. As we examined in a recent blog post, ideally, you’ll have 20% or more of your new home’s value to use as a down payment. Doing so can help you avoid the additional burden of private mortgage insurance (PMI). On the other end of the spectrum, it’s possible to get preapproved with FFCCU for as low as a 5% down payment.

Mortgage rates can be fixed or variable, and term lengths vary, but 15, 20, or 30 years are fairly common.


With housing inventory currently low, you’re entering a competitive market. Getting pre-approved for a mortgage will give you a crucial edge. Pre-approval shows sellers and realtors that you’re ready and able to make an offer. But you’ll want to be in as strong a financial position as possible before getting started, as you will be asked to provide proof of assets, income, employment, and debt information. Your credit score and history are also going to be major factors.

Having a large payment available might allow you to recast your mortgage as well. Talk this option over with your mortgage broker for details.


So, it’s home equity vs mortgage, and you’re leaning towards mortgage. The good news is that at FFCCU, we make the mortgage game easy. We offer personalized service and great rates and take a more comprehensive look at a lendee’s borrower’s overall history. Get started today.


We hope that comparing the two paths and examining some potential bumps in either road helped you get a clearer picture of which option—renovation with help from a home equity loan or a new home with a mortgage pre-approval—is going to be right for you.

Still need to talk it out? I’d be happy to chat about mortgage next steps, details, and answer any of your questions – both the ones you have and the ones you didn’t know you needed to ask! You can schedule a mortgage loan meeting with me using the digital calendar, or call 216.621.4644 x1431. For rates and more information, head over to today.

*APR = Annual percentage rate. Terms and conditions apply. Visit for details.