Rising home values may give you a source of money you haven’t considered. A home equity line of credit (HELOC) can unlock those funds.
It’s your home equity — access it faster
A HELOC loan or home equity line of credit is a second mortgage with a revolving line of credit borrowed against the equity of your home and offers a flexible way to borrow funds. HELOC loans differ from traditional home equity loans in that you can draw money from a HELOC as needed instead of taking out a single lump sum loan.
I offer several types of HELOCs, we can discuss which is best for your situation before you apply.
Since a HELOC loan is a revolving line of credit similar to a credit card, you can borrow funds up to a set credit limit, and interest is charged on the amount borrowed. The revolving credit line can be paid down and reused during your draw term, which typically lasts 5 to 10 years. You’ll only pay interest throughout the draw term. After the draw term is complete, you may either pay the balance in full or pay according to a set schedule (interest must still be paid). You may also refinance the equity line for an additional 5 to 10 years. A home appraisal may be required to obtain a HELOC mortgage.
With a HELOC loan you can:
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Set up emergency access to credit
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Buy a new car, truck, boat or RV
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Pay for college tuition
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Renovate your home
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Consolidate your bills
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Be prepared with the following information:
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Valid state-issued ID
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User ID and password for bank accounts
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Proof of homeowners insurance
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Payroll provider username and password (if you have online access)
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Registration with IRS.gov or ID.me for ID and tax purposes
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Home values have increased steadily in recent years. Even if you purchased your home a year ago, you may have a substantial increase in value. This, combined with the principal payments you have made on your mortgage, creates home equity: The difference between what your home is worth and what you owe on your mortgage. You can use a HELOC to borrow against that equity, as long as your first mortgage and HELOC combined don’t exceed 85% of your home’s value.
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With a traditional refinance, you could access your equity, but you’d have a new, larger loan, probably a higher rate than your current loan, and full closing costs. A HELOC leaves your current loan in place, but most have variable rates.
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Frequently asked questions
HELOC Benefits:
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Customization - Variable From Top To Bottom
HELOC loans offer variable or fixed interest rates that are usually lower than the interest rate on a credit card. Credit limits are also variable and depend on your home equity. -
Convenience - From Open To Close
Closing on a HELOC loan is easy and may even take place in your own home. You also don’t have to pay closing costs or appraisal fees. -
Accessibility At All Times
Several options are available to you for accessing cash, including personal withdrawals, check writing and card use.