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Mortgage  Question?
Should I use a PACE loan or home equity loan?

Should I use a PACE loan or home equity loan to finance home improvements? The lender is quoting a higher interest rate on the PACE loan but the loan is attached to the property and not the borrower.

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

Based on the information you provided a home equity loan is likely the better option for financing your home improvements. While a PACE loan offers benefits such as 100% financing and the loan being attached to the property and not the borrower, the interest rate you were quoted is significantly higher and PACE loans can create complications if you decide to refinance your mortgage or sell your home in the future. We provide a thorough overview of PACE loans and review the Pros and Cons of PACE loans on FREEandCLEAR.

I would recommend a home equity loan in your situation because you would pay a lower interest rate and a home equity loan offer greater financial flexibility. We also provide a comprehensive overview of home equity loans and review the Pros and Cons of home equity loans on FREEandCLEAR.

Finally, I recommend that you shop multiple lenders to ensure that you receive the best terms on your loan. You can review lenders in your area by clicking INTEREST RATES Not all of the lenders on our rate tables offer home equity loans but many do. For example, PenFed Credit Union, which is listed on our rate tables, usually offers highly competitive terms for home equity loans. We advise you to contact at least four lenders as shopping multiple lenders is the best way to save money on your mortgage.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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