What is an Equity Line of Credit HELOC
Understanding How Get a Home Equity Line of Credit
A home equity line of credit is a loan against the equity in your home. With a HELOC you have the ability to access as much of your credit line as you need at any given moment. The amount of available credit on HELOC loans increases as you pay down the balance.
Home equity loans allow you to borrow against the amount of ownership you have already built up in your home through payments and appreciation, but unlike many other types of loans or credit, the interest paid on a home equity loan is tax-deductible! Funds borrowed through a home equity loan may allow you to fund costly expenditures such as those associated with higher education. Or, maybe you are interested in paying off high interest debt or taking advantage of debt consolidation for phenomenal long-term savings.
How does the interest paid on your credit cards, for example, compare to rates available through a home equity loan? It may be possible to borrow money in a single disbursement, or to obtain a home equity line of credit which allows you to make purchases as needed through a credit card or checking account. Ask how home equity loans can also be used to increase the value of your home through home improvement projects.
There are many products available, and all inquries are handeled immediately; referred through our network of licensed bankers and credit score specialists in an effort to deliver reputable an reliable information as a courtesy to our members.
Advantages of a Home Equity Line of Credit
- Reduce the monthly payments on other debt by using a home equity credit line to consolidate your high interest debt
- You can reduce your tax burden since the interest you pay on home equity lines of credit is tax deductible for those who have enough qualifying expenses to itemize deductions
- With home equity line of credit loans you can pay off the loan as soon as you can financially afford it. You have the option to pay the minimum payment or you can pay more in order to increase your available loan potential
- Getting a home equity line of credit may also allow consumers to switch from a variable rate to a fixed rate. This will, however, depend on the individual lender
- A home equity line of credit (HELOC) is quick and easy to access with your home equity line credit checks
- Real-Estate-Yogi can put you in touch with lenders who offer you the opportunity to manage your account online
How to Use a Home Equity Line of Credit
When you have lived in your home long enough to have equity in it, you can use your equity to do a number of things with the funds. You can then access the funds whenever you need them. Some of the things you can do with a fixed rate home equity line of credit include:
- Debt consolidation
- Educational expenses
- Purchase of a new vehicle or refinancing current vehicle
- Doing things you have ever been able to afford to do
- Investing in green technology
- Home repairs and remodeling
- Paying for a wedding or retirement trip
What to Think about when Considering a Home Equity Line of Credit
Even a home equity line of credit for bad credit offers both advantages and disadvantages. There are some specific things you should look for when you are looking for a lender for a line of credit with the lowest HELOC rates.
- Make sure you don’t have to pay an application fee when you close on the loan. If the lender charges an application fee it should be refunded at closing
- There should never be closing or appraisal costs
- Make sure you don’t have to pay management fees for check-writing or account management
- Avoid lenders that want to charge usage fees
- If you choose a variable APR make sure the lender charges home equity line of credit rates that are equivalent or close to the prime rate and adjusted quarterly
- Make sure there is a cap on any changes to the interest rate, and if possible choose a lender that adjusts quarterly rather than monthly
- There should be a lifetime cap on how much the interest rate can increase
- The lender should offer the borrower the option to change to a fixed rate loan if the interest rises
- If conversion is necessary the borrower should be allowed to make only the interest payments
- There should not be a pre-payment penalty
Why You should Let Real-Estate-Yogi Handle Your Home Equity Line of Credit
- Home equity lines of credit have the advantage of having a low interest rate. The reason this occurs is because the debt is secured by the property’s equity.
- With a home equity credit line you have instant access to cash—all you need to do is access the funds anytime you need to make a purchase.
- In most cases you are able to repay the principal any time you want as long as you remain current on the minimum monthly interest.