Home Equity Lines of Credit (HELOC)

Home equity lines of credit give you the flexibility of using the value of your home to get the credit you need. Equity is based on the difference between the home’s worth and what you owe on the mortgage. A HELOC is secured by the collateral in your home, so you get access to cash that works like a credit card. You withdraw the funds you require based on the revolving credit line. Many HELOCs come with fixed interest rates, so you know how much you will pay back.

A home equity line of credit has designated draw and repayment times. Draw periods last between 5 to 10 years and allow you to make the minimum payment (sometimes interest only), though you can pay on the principal during this time. Once the draw period ends, you enter repayment. At this time, you no longer have access to the credit line, and you begin making monthly payments on the principal and interest that you borrowed.

A HELOC is an important credit choice when you need quick access to cash at a competitive interest rate. When life events arise, tapping into your home’s equity provides a useful financial tool apart from credit cards. Since HELOCs are time-limited, consider what you need to accomplish with these funds so you make smart financial choices that put you ahead.

These are some common reasons to consider home equity lines of credit: making home improvements, paying off other debts, financing for educational goals, covering medical bills and investing in another property. Once approved, you choose how to spend the funds over the borrowing period. A knowledgeable 101 Home Loans loan officer can help determines if a HELOC is the right option given your personal circumstances and guides you through the lending process if it’s the best choice.