What is a
Home Equity Line of
What are Home Equity Lines of Credit?
Can your home's value be turned into cash that you can access when you need it? It can if you qualify for a Home Equity Line of Credit (HELOC).
Home Equity Line of Credit Overview
A HELOC is a type of home loan – usually with an adjustable rate – that gives the homeowner access to a line of credit determined by the lender from the value of the home.
Home Equity Line of Credit Benefits
Most borrowers get a HELOC for a major home repair or remodeling project. If the loan is used for home improvements and repair, you can write the interest off your taxes. (Consult a trusted tax advisor or tax professional for financial or tax advice.)
With the line of credit aspect of a HELOC, you can withdraw only the funds you need versus getting one lump sum of cash in a typical loan situation, which may take longer to pay off with the added funds and additional interest.
A HELOC could help you pay for:
- Major indoor and/or outdoor home improvements/repairs, such as a new kitchen, bathroom, patio, deck, etc.
- Consolidate your debt/improve your debt-to-income ratio
- Auto loan
- Student loans
- Medical bills
- Elderly care
- Investment property
- Boost your credit score
- Get a lower interest rate
- Improve your financial situation
- Get potential tax deductions (be sure to consult a tax professional)
Home Equity Line of Credit Requirements
What is needed for a HELOC loan?
First and foremost, you need to have enough equity in your home to qualify for a HELOC loan.
For example, if your home is worth $300,000 and you owe $100,000, a lender may typically let you access up to 80% of the home’s value (minus your current mortgage), which in this example would be $240,000. When you subtract the current mortgage, you arrive at a maximum HELOC amount of $140,000 to access as credit.
In addition, credit history, income and other debts/financial obligations will be considered for loan eligibility. An appraisal of your home may be required.
What is an Adjustable-Rate HELOC?
With an adjustable-rate HELOC, the interest rate can fluctuate monthly, depending on the market industry rate. You pay only interest during the draw period (usually 10 years). After this period, you are required to pay the interest and the principle.
HELOC Loan Rates
Is a HELOC loan right for you? Contact us today and we can discuss your situation and find the right loan to fit your financial needs.