HELOCs: What are they and how do they work?

Have you heard the term HELOC before and wonder what that meant? Let’s start with the basics, HELOC stands for Home Equity Line of Credit.  

What is a HELOC? A HELOC is a line of credit secured by equity in your home. You can get an estimate of the equity in your home by subtracting the balance on your loan from the value of your home and dividing that by the value amount to get a percentage of equity. You usually need about 20% equity or more to obtain a HELOC.

Why get a HELOC?  HELOCs are a low-interest way to borrow larger amounts with relatively low monthly payments. Some common uses include home improvement projects, paying medical bills, refinancing debt, covering the cost of college tuition, or even taking a much needed vacation. In some cases, your interest paid may be tax deductible. Speak with a tax advisor for more information on whether this may be the case for you.

Do I have to pay back the entire loan amount immediately? Not usually. Most HELOCs have a draw period and a repayment period. At Christian Financial, HELOCs have a 10 year draw period and 10 year repayment period. These time periods vary between lenders; be sure to ask when applying for the HELOC.

Looking for a HELOC? Christian Financial offers great rates on HELOCs, PLUS the credit union will reimburse your appraisal costs up to $350. Find out more here.
 
Posted: 9/6/2017 9:00:00 AM by Kayleigh Bell | with 0 comments