What is a HELOC?
What exactly is a HELOC and how is it useful, or is it? Today we’re covering HELOC’s, so read on for more details and see if it can work for you.
With a HELOC, you essentially borrow against the available equity in your home and the house is used as collateral for the line of credit. As you repay your outstanding balance, the amount of available credit is replenished (much like a credit card). This means you can borrow it against it again if you need to, and you can borrow as little or as much as you need throughout your draw period up to the credit limit you establish at closing. At the end of the draw period, the repayment period begins.
To qualify for a HELOC, you need to have available equity in your home, meaning that the amount you owe on your home must be less than the value of your home. You can typically borrow up to 85% of the value of your home minus the amount you owe. In addition, a loan officer will also look at the other things they did when you apply for a mortgage: employment history, credit history, monthly income, etc
Lastly, there are two different types of HELOC’s: variable and fixed interest rate. These are quite self explanatory, but the rest of this information can be tricky; speak with your loan officer today if you’re interested in discovering your options!