A home equity loan or home equity line of credit (HELOC) is a loan product based on your home’s equity. The funds may be used for any purpose, including renovations, travel, to consolidate debt, or fund your children’s education costs. Payments on a home equity loan or line of credit are not deferred, unlike reverse mortgages. So, you will owe on them each month.
What Is A HELOC Or Home Equity Line Of Credit?
A home equity line of credit, or HELOC, is a loan that is secured against your home value. This means it requires underwriting that verifies your financial standing, credit history, and the market value of the house, which will be used as collateral for the loan.
HELOCS are unique in that you receive a revolving line of credit to draw on as needed.
With the line of credit, you only make payments on the amount of credit you are using. For instance, if you’ve got a $100,000 line of credit but only use $15,000, that’s the amount you’ll make payments on. HELOCs typically have variable interest rates.
You make payments on a home equity loan or HELOC on a monthly basis, beginning immediately after you take out the loan.
Why Get A HELOC?
Lower Interest rates
A HELOC often has a lower interest rate than some other common types of loans, and the interest may be tax deductible. Please consult your tax advisor regarding interest deductibility as tax rules may have changed.
Pick your budget
A HELOC is an excellent source of money to pay for renovations that are tackled in stages over time. It’s suitable for long-running home projects because it allows you to borrow money as you need it and to pay interest only on money that has been spent.
Looking to use your HELOC loan for a specific purpose? We might have a loan program for that!
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