A line of credit that puts your home’s equity to work.
A little extra money can go a long way. Sometimes you just need help to cover those unexpected bills, aid with a quick home improvement expense, or relieve a spike in your child’s college tuition costs.
With a low introductory rate, no application or annual fees, no restrictions on use of funds, and easy access to money when you need it, there are plenty of perks to considering this type of loan. However, it’s important to know the particulars before applying.
Let’s take a look at HELOCs and see if it’s the right option for you!
What is a HELOC?
A home equity line of credit (HELOC) is a form of credit that’s secured by the paid value of your home. Unlike home equity loans, the funds for a HELOC are revolving and can be withdrawn when you need to use them. During what is known as the "draw" period, you’ll be able to access available funds, which generally ranges from 5-10 years. Once the draw period has concluded, any withdrawn funds plus interest will need to be repaid. Typically, homeowners can apply for this line of credit for up to 85% of their home’s equity, or the difference between what’s currently owed on their home loan and the market value of it.
What are the advantages of getting this type of loan?
Getting this loan through a credit union certainly has its advantages! When you get a HELOC at Clearview, we offer a low introductory rate, no application or annual fees, and a possible refund on closing costs.
People are attracted to this loan for its flexibility. This line of credit allows you to withdraw funds when you need it instead of receiving a lump sum all at once. You never have to borrow the full amount you’re approved for, but it’s there if you ever need it. In addition, a HELOC can also end up being friendly to your monthly budget. Investopedia explains that “you’ll only pay interest during the draw period; this might mean your monthly payments are more manageable compared to the fixed payments on a home equity loan.”
What about the disadvantages?
Borrowers should be aware that a HELOC typically has a variable interest rate. According to ValuePenguin, “a variable rate loan has an interest rate that adjusts over time in response to changes in the market.” In periods of economic uncertainty, a variable interest rate could have an impact on your monthly payments and budget overall.
Another disadvantage is that your home will be used as collateral, similar to a home equity loan. It’s very important to recognize that your house could potentially be foreclosed upon if, for whatever reason, you are unable to repay the loan.
I’ve decided that a HELOC is right for me. What’s next?
Our team at Clearview is here to help! You can reach out to one of our Lending Representatives today or go ahead and apply now. We also have financial calculators to help you better understand your future loan.
With the flexibility of a HELOC, you’ll be able to help pay for the planned and the unexpected. Whether you’re looking to start your next renovation project or take a dream vacation, the equity in your home can help you achieve your goals.
